Research on IPO Pricing Mechanism Based on Auction

Abstract

There are three pricing methods: fixed price, auction and accumulative bid pricing. Although cumulative bidding pricing is the first choice of major capital markets in the world, in recent years, Some financial markets in some countries and regions have started to adopt auction methods again and have perfected various auction mechanisms in the process of IPO pricing and become the pricing mechanism approved by the market. Based on the current situation of China A-share IPO market, this paper puts forward an auction model to analyze the role of this model in the pricing of new shares, and concludes that with the increase of the number of small and medium-sized investors, this paper makes a certain sort of research on the pricing mechanism of new shares. Institutional investors will be allocated less shares and information rentals, while issuers' earnings will increase.