The study of cluster analysis of pricing of IPO

Abstract

The underpricing of initial public offering has been one of the "the new issue puzzles" in the finance. Working out an objective and scientific method to solve this problem has been the goal of academic, authority and underwriters. Based on the unique character of the Chinese stock market, this paper examines the popular models and theories of the pricing of IPO of the world and analyzes their applicability and limitation in practice. Then we puts forward a new way that applies the cluster analysis, one of multistatistic analysis to the pricing of the initial public offering. By empirical analysis, this paper has raised an effective and feasible method to the pricing of IPO. This way can effectively solve the underpricing of IPO and give some insights and understanding to the reform of the pricing of new issues on Chinese security market.