Abstract: IPO pricing is a process that information incorporates into price and price revises gradually. This paper assesses the efficiency of book-building mechanism based on the perspective that information incorporates into IPO price using the data of IPO market through the second reform of book-building mechanism of China. Research shows the issue price has partially adjusted the information in book-building, the information that hasn′t been priced in issue price has obtained underpricing reward, and the partial adjustment for private information is in order to stimulate the institution to enclose the demand information of IPO truly, but the partial adjustment for public information has revealed the inefficiency of book-building mechanism in China; the adjustments for IPO issue price to information are asymmetric, much bigger for negative public information and private information when the institutions′ bidder prices are higher, which indicates that book-building mechanism of China has the corrective effect for itself. Therefore, we need to improve the reveal ability for issue price to public information and use the ration rule of “Close to the Price” to restrict the high quotation actions of institutions.

Key words: public information, private information, IPO book-building system efficiency, issuing and pricing, initial return