A Study on Factors Influencing the Initial Public Offerings (IPO) in the Bombay Stock Exchange (BSE), India

2016 ◽  
Vol 3 (1) ◽  
pp. 22-35
Author(s):  
Rajesh C. Jampala ◽  
P. Adi Lakshmi ◽  
Srinivasa Rao Dokku
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Public Offerings ◽  
Ipo Performance ◽  
Factors Influencing ◽  
Long Run ◽  
The Face ◽  
Market Capitalisation

This study has examined the IPO performance in India from 2007 to 2013. Results show that under-pricing exists in the first day of trading during the particular period, but results show that the degree of under-pricing is dramatically decreased in comparison with what is shown in previous studies. The study finds that the IPOs are influenced by its issue variables. The face value of the shares and oversubscription subscription of the share are highly affected factor for underpriced in initial day of listing. After 36 months of listing the IPOs are underperformed by 29.06 percent and market capitalisation of the firm, issue premium of the share, face value of the share, issue price, and oversubscription of IPOs are highly influencing IPOs performance in long run. The study has considered 146 companies for identifying the factors influencing the Initial Public Offerings (IPO) in the Bombay Stock Exchange (BSE), India.

scholarly journals Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan

2021 ◽  
Vol 2 (2) ◽  
pp. 97-140
Author(s):  
Muhammad Zubair Mumtaz ◽  
Ather Maqsood Ahmed
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Activity Period ◽  
Risk Level ◽  
Calendar Time ◽  
Public Offerings ◽  
Explanatory Variables ◽  
Ipo Performance ◽  
Long Run

This study investigates the long-run pricing performance of 90 IPOs listed on the Karachi Stock Exchange from 1995 to 2010. This study finds evidence that IPOs show signs of underpricing and underperform over three years after listing; however, the observed pattern of underperformance is not always statistically significant. The equal-weighted buy-and-hold abnormal returns and calendar-time analysis confirm the significance of the IPO underperformance over the three year period after listing on the exchange. Extreme bounds analysis is used to test the sensitivity and robustness of twenty six explanatory variables in determining the IPO underperformance. The results reveal that the robust predictors of IPO underperformance include underpricing, financial leverage, age of the firm and oversubscription for buy-and-hold return calculations and underpricing, hot activity period, post issue promoters’ holding, issue proceeds and aftermarket risk level for cumulative abnormal return calculations. Moreover, the fads hypothesis and the window of opportunity hypothesis are applied to explain long-run IPO performance.

scholarly journals The Berlin Stock Exchange in Imperial Germany: A Market for New Technology?

2016 ◽  
Vol 106 (11) ◽  
pp. 3558-3576 ◽  
Author(s):  
Sibylle Lehmann-Hasemeyer ◽  
Jochen Streb
Keyword(s):  
Initial Public Offerings ◽  
Industrial Revolution ◽  
Stock Exchange ◽  
New Technology ◽  
Going Public ◽  
Public Offerings ◽  
Imperial Germany ◽  
Long Run ◽  
Innovative Firms ◽  
Surprising Fact

Analyzing 474 cases of firms going public in the German capital between 1892 and 1913, we show that innovative firms could rely on the Berlin stock market as a source of financing. Our data also reveal that initial public offerings (IPO) of innovative firms were characterized by particularly low underpricing, comparatively high first trading prices, and no long-run underperformance. We interpret these empirical results as evidence for the surprising fact that in the period of the Second Industrial Revolution the Berlin stock exchange was already a well-functioning market for new technology. (JEL G14, N23)

scholarly journals The Aftermarket Performance of Initial Public Offerings in Pakistan

2016 ◽  
Vol 21 (1) ◽  
pp. 23-68
Author(s):  
Muhammad Zubair Mumtaz ◽  
Zachary A. Smith ◽  
Ather Maqsood Ahmed
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Activity Period ◽  
Risk Level ◽  
Public Offerings ◽  
Explanatory Variables ◽  
Market Sentiment ◽  
Long Run

This paper estimates the aftermarket performance of initial public offerings (IPOs) listed on the Karachi Stock Exchange. The evidence confirms that IPOs generate statistically significant abnormal returns in the short run, which indicates that underwriters initially underprice IPOs when analyzed using a short time horizon. However, when using longer time horizons to estimate abnormal performance, the results indicate that IPOs underperform in the long-run. There is an apparent dislocation between the initial valuation set by underwriters and the premium paid by the market for these new issues. The market sentiment that causes this temporary disequilibrium eventually fades and the market reprices the newly issued shares. We conduct an extreme bounds analysis to test the sensitivity and robustness of 16 explanatory variables in determining the long-term performance of unseasoned newly issued shares. The results indicate that the long-term investment ratio, industry affiliation, market-adjusted abnormal returns, financial leverage, return on assets, IPO activity period, the aftermarket risk level of unseasoned issues, and the post-issue promoter’s holdings variables significantly affect IPOs’ aftermarket performance. Theoretically, the overreaction hypothesis, ex-ante uncertainty hypothesis and window-of-opportunity hypothesis best explain IPOs’ aftermarket performance in this study.

scholarly journals Factors Influencing IPO Decisions. Do Corporate Managers Use Market and Corporate Timing? A Survey

2014 ◽  
Vol 42 (1) ◽  
pp. 30-39 ◽  
Author(s):  
Adam Szyszka
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Going Public ◽  
Public Offerings ◽  
Corporate Managers ◽  
Market Mispricing ◽  
Corporate Decisions ◽  
Factors Influencing ◽  
Warsaw Stock Exchange ◽  
Do So

Abstract This paper explores the motives for Initial Public Offerings (IPOs); that is, whether market mispricing or the behavioral inclinations of investors and analysts impact corporate decisions about rising equity, with a particular focus on market and corporate timing practices of managers going public. To do so, an anonymous survey was conducted of 166 managers of firms that recently went public at the Warsaw Stock Exchange in Poland (being the second most active IPO market in Europe, after London). The resulting data reveals that managers attempt to time bullish markets and good historical corporate financial results.

Performance of IPOs of Indian Companies Backed by Private Equity

2019 ◽  
Vol 23 (4) ◽  
pp. 397-409
Author(s):  
Till Drebinger ◽  
Shailendra Kumar Rai ◽  
Heiko Hinrichs
Keyword(s):  
Initial Public Offerings ◽  
Private Equity ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Public Offerings ◽  
Ipo Performance ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
Short Run ◽  
The Impact

We examine 616 Indian initial public offerings (IPOs), including 116 IPOs backed by private equity (PE), between 2000 and 2016, to test whether PE-backed IPOs perform better than non-PE-backed IPOs in the short run as well as in the long run in terms of cumulative abnormal returns (CARs). We also examine the impact of the PE firm nationality on post-IPO performance. Consistent with the existing literature, we find underperformance for all IPOs, on an average, within 1 year. However, PE-backed IPOs have lower degree of underperformance than non-PE-backed IPOs. We also find that size, liquidity and leverage have a positive impact on the post-IPO performance after the financial crisis, whereas issue amount and capital issue year are negatively correlated to CARs before and during the crisis. We also find significant effects of PE firm nationality on CAR development. IPOs backed by India-dedicated PE firms perform best, while those backed by foreign PE firms perform worst and even underperform non-PE-backed IPOs. IPOs by foreign PE firms perform better if they co-invest with India-dedicated PE firms.

scholarly journals Size of Offer, Over-subscription Ratio and Performance of Malaysian IPOs

2020 ◽  
Author(s):  
Othman Yong ◽  
Puan Yatim ◽  
Ros Zam Zam Sapian
Keyword(s):  
Initial Public Offerings ◽  
Significant Positive Correlation ◽  
Stock Exchange ◽  
Kuala Lumpur ◽  
Public Issue ◽  
Positive Correlation ◽  
Public Offerings ◽  
Long Run ◽  
Initial Return ◽  
And Performance

This paper examines the initial and the long-run performance of initial public offerings (IP0s) stocks listed on the Main Board of the Kuala Lumpur Stock Exchange. This study finds a significant mean initial return and mean over-subscription ratio, even-though not as high as reported in earlier studies. Size of offer is not correlated with the over-subscription ratio. In general, initial returns. are significantly higher than returns for subsequent longer-term holding periods. Mean initial returns among the three types of issue compared are not significantly different from each other Only in the case of offer for sale that we find a significant positive correlation between its over-subscription ratio and its initial return. Offer for sale also shows a positive correlation between its over-subscription ratio and its raw let11111 far day-365, but turns significantly negative for day-910 and day-] 095. In the case of combination of public issue and offer for sale, over-subscription ratio is not significantly correlated with longer- term returns, for either raw or adjusted return. Finally, in the case of public issue, its over-subscription ratio is significantly correlated with its raw return only for day-180 and day-540, and for its adjusted return, the correlation is significant only for day-180 and day-365.  

scholarly journals A Review Of The Determinants Of Long Run Share Price And Operating Performance Of Initial Public Offerings On The Johannesburg Stock Exchange

2014 ◽  
Vol 13 (5) ◽  
pp. 1161 ◽  
Author(s):  
Chimwemwe Chipeta ◽  
Adrian Jardine
Keyword(s):  
South African ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Operating Performance ◽  
Negative Relationship ◽  
International Investment ◽  
Share Price ◽  
Public Offerings ◽  
Johannesburg Stock Exchange ◽  
Long Run

This paper provides some new evidence on the determinants of long run operating and share price performance of Initial Public Offerings (IPO) on the Johannesburg Stock Exchange (JSE). It has been hypothesised that the information contained in the pre listing documents could shed some light on the aftermarket performance of South African IPO shares. In line with previous literature, South African IPO shares significantly underperformed the market on average. Additionally, there is a statistically significant negative relationship between IPO Volume and long run performance, suggesting that the South African IPO market may be subject to the fads and over optimism theory of Ritter (1991). The overoptimism hypothesis is further cemented by a negative correlation between pre IPO revenue forecast and aftermarket operating performance. Listing expenses play a moderate role in the reduction of the aftermarket performance of IPOs on the JSE. However, it appears that international investment banks have a positive influence on the aftermarket performance of IPOs on the JSE. Likewise, firms audited by the BIG 4 audit firms tend to perform well in terms of aftermarket buy and hold returns. Large firms at the time of listing tend to perform well and firms with high growth prospects at the time of listing generate a negative and significant return on their investment in total assets. Although the contingent liabilities disclosed in the prelisting reports negatively influence most of the measurers of aftermarket performance, the relationship is, by and large, insignificant.

Determinants of Initial and Long-Run Performance of IPOs in Indian Stock Market

2008 ◽  
Vol 4 (4) ◽  
pp. 24-37 ◽  
Author(s):  
Shikha Sehgal ◽  
Balwinder Singh
Keyword(s):  
Stock Market ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Public Offerings ◽  
International Evidence ◽  
Long Run ◽  
Overreaction Hypothesis ◽  
The Mean ◽  
Indian Stock Market ◽  
Very High

The paper investigates the possible determinants of underpricing and the long-run performance of 438 Indian initial public offerings (IPOs) listed on the Bombay Stock Exchange during June 1992 – March 2001. The mean underpricing has been found to be 99.20 per cent, which is very high if compared with the international evidence. Age of the firm, listing delay at IPO and number of times the issue is subscribed have been found to be the important determinants of underpricing. Indian IPOs do not tend to underperform in the long-run and underpricing has been primarily found to explain the long-run performance. The study, thus provides evidence of overreaction hypothesis.

A Study on Performance Evaluation of Initial Public Offerings (IPOs) in India during 2007-13

2015 ◽  
Vol 6 (1) ◽  
pp. 18-37
Author(s):  
Srinivasa Rao Dokku ◽  
Rajesh Choudary Jampala ◽  
P. Adi Lakshmi
Keyword(s):  
Performance Evaluation ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Short Term ◽  
Public Offerings ◽  
Long Run ◽  
Short Run ◽  
Indian Stock Market ◽  
Jel Classifications

The authors analyze 146 Indian Initial Public Offerings (IPOs) that were listed in Bombay Stock Exchange (BSE) between January 2007 and December 2009. The units of the sample are selected on the basis of companies available in the Indian stock market for three years for calculating short-term and long-term returns. The evidence suggests that the IPOs are initial day underpriced by 4.25 per cent and underperformed by 29.06 per cent after 36 months of listing. The study also finds that issue variables are highly influencing the IPOs performance in short run and long run but age of the company doesn't have any influence on its performance during the study period. The JEL classifications are G12, G14, G24, and G32.

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