Author(s)

Huanran Kong

Mechanical Engineering School of Mechanical Engineering, China University of Mining and Technology, Xuzhou, China.

The venture capitalists provide supervision and certification service for shareholding enterprises, which reduce the information asymmetry and attract more high quality investment banks. Thus, the price is close to the market price when the enterprise enters the market and under-pricing is avoided thereby. Based on the supervision and certification hypothesis, this paper builds a pricing model of investment banks and venture capital to explain the pricing mechanism of investment bank, investment risk pricing mechanism and the causes of underpricing.

Investment Banks, Venture Capital, Pricing, Underpricing

Kong, H. (2018) The Pricing of IPO by Investment Banks and Venture Capital: A Theoretical Model. Open Journal of Social Sciences, 6, 209-221. doi: 10.4236/jss.2018.610017.