Intrinsic Value and Market Timing of Initial Public Offerings

摘要

To avoid debates on the interpretation problem of market-to-book, the residual income model is employed to calculate the intrinsic value and estimate the extent of mis-pricing by market. Using a sample of Chinese listed companies from 1998 to 2003, the empirical evidence supports that equity market mis-pricing plays a significant role in decision making on the initial public offering. Our evidence verifies that the market timing theory can be applied to the analysis of financing behavior of Chinese listed companies, but the long-lasting effect is insignificant.