IPO Pricing Analysis Based on Institutional Investors Irrational Quotation

This paper is a study of the institutional investors´ irrational bidding behavior. Under the rational issuer assumption, we establish a model and analyze the IPO price setting and institutions allocation under different value signals. Through analysis, we found that when the institutions have good value information, the issuer´s offering constraint mechanism is effective; when they have bad information, quotation constraint mechanism entire uselessness, they would deliberately convey informative or good signals , causing the IPO price higher than its value.