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Intrinsic Value and Market Timing of Initial Public Offerings |
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| Authors: | WU Shui-ting CHEN Jia-hong HUANG Wei-jing XU Yang |
| Institution: | 1. School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China;Intelligent Control Development Center, Southwest Jiaotong University, Chengdu 610031, China 2. College of Humanities and Social Science, Southwest Jiaotong University, Chengdu 610031, China 3. Sichuan Top Vocational Institute of Information Technology, Chengdu 611743, China 4. Intelligent Control Development Center, Southwest Jiaotong University, Chengdu 610031, China |
| Abstract: | 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. |
| Keywords: | Capital structure Market timing Decision making Listed company |
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