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This work suggest that, under the limitation of the regulations
for IPO in Taiwan, the true value signalled by the firms at IPO
might be the closing price at which the trading volumn
increases suddenly rather than the offering price of new
issues. Based on this assumtion, this work futher examines the
relation between the signal of the sudden increase in trading
volumn and short term equilibrium, as well as the factors that
investors may use to value the price of the firms at IPO. The
conclusions of this paper are summarized as follows: 1. The
firms at IPO tend to reach equilibrium only after the trading
volumn increase suddenly. 2. The closing price at which the
trading volumn raising suddenly explains the short term
equlibrium price much better than the offering price does. 3.
Over all speaking, there is no abnormal return from the date of
the trading volumn increase suddenly to the date of short term
equlibrium. 4. For the difference between firms at IPO in
abnormal return from the date of the trading volumn increase
suddenly to the date of short term equlibrium, signaling theory
and game theory seems to be a reasonable explaination. 5.
Market index and predicted earning per share may well explain
the price at short term equlibrium. 6. While the stock market
is stable, size effect has a significant impact on the price at
short term equlibrium.
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