TITLE:
Determinants of IPOs Initial Return: Extreme Analysis of Indian Market
AUTHORS:
Rohit Bansal, Ashu Khanna
KEYWORDS:
IPOs; Post Market Crisis; Ownership Structure; Share Holding Pattern; BSE; Underpricing; Firm Specific Factors; Market Related Variables
JOURNAL NAME:
Journal of Financial Risk Management,
Vol.1 No.4,
January
2,
2013
ABSTRACT: This paper attempts to design and test empirical models, which integrate theoretical, institutional, and other factors, which interact to explain ownership structure. Ex-ante information at the level of under-pricing succeeds the Indian stock market crunch. The study is based on IPO that listed at Bombay stock exchange given that April 2000 to December 2011. Multiple linear regressions are used to distinguish the relationship between various independent variables with the dependent variable, i.e. level of underpricing. The outcomes of multiple regressions reveal that, firm’s age, IPO years, book building pricing mechanism, ownership structure, issue size, & market capitalization explained 44% of the variation in issuer under-pricing, Durbin Watson’s value subsisted 1.58, which indicates that, there is a positive sequential rela-tionship between variables. Number of share offered, issue size, market capitalization, subscription offer timing, book building mechanism and IPO years 2006, 2009 & 2011 are constructed to have important effect on the level of underpricing after the Indian market crisis. Nevertheless, firm’s age, IPOs year 2008, private issuing firms, non institutional promoters, Indian promoters and non institutional non promoters contain no significant difference in the level of underpricing after-market crisis.