Sumit which reported only 45.38 percent under-pricing. It

Goyal, Inderpal Singh (2014). A Study on the performance of Initial Public
Offering. Apeejay Journal of Management
and Technology, Volume 9. Through this paper, an attempt has been made to
empirically explore the performance and determinants of under-pricing of
Initial Public Offerings (IPOs) in the Indian market. Research attempts to
examine the performance of IPOs listed on NSE. The study presents evidence on
performance of IPOs on the initial day of listing i.e. 1st day of listing of
271 companies listed on NSE. The study reports that 79.33 percent of the IPOs
issued were under-priced on the day of listing. It suggests that the high
initial return may be due to the over expectation of investors. The study also
evaluated the performance of IPOs on the 30th day from the day of listing which
reported only 45.38 percent under-pricing. It concludes that on 30th day the
expectation of the investors gets decreased. The independent variables i.e. age
of the firm, ex-ante, market volatility, leverage ratio, are able to explain
23.8 variability of the under-pricing. The sector analysis of IPOs provided
that information technology, power, steel, real estate are the sector where the
IPOs were under-priced heavily i.e. 90 percent and above companies of these sectors
were under-priced on the initial day of listing. It can be interpreted that
IPOs are risky and thus fail to attract more interest from the investors. To
attract more interest of the investors the companies deliberately under-price
their issue to gain profit from their investors. IPOs might be perceived to be
more risky and uncertain at the time of issue which results in greater under-pricing.
Issuing firms could be able to make a trade-off in the short-term under-pricing
and long-run underperformance.

Anuradha Sheokand (2015). A comprehensive study on Under Pricing in Indian
Initial Public Offerings, International
Journal of Informative & Futuristic Research. The above analysis
supports the existence of significant under-pricing in Indian IPOs market and
confirms the results of other Indian studies (Shah 1995), Krishanmurti (1999),
Jaitly (2004) and Singh (2008). It can be concluded that average high raw
returns and MAERs and large IPO volume during the boom period might be
indicative of the investors? optimism resulting from the liberalization
initiated by government and SEBI during the first half of 1990s. It was
documented in the IPOs literature that small and young companies were likely to
go public during the hot period to take advantage of investor’s enthusiasm.
Signally theory claimed that the good firms would get listed during the hot
period and under-priced more to win investor’s confidence. The main objective
was to find out the performance of Indian IPOs for short period, i.e. from the
date of offer to the public to the date of their first day of trading after
listing on stock exchange. Also comparison was made between the boom period
(1992-96) and the slump period (1997-2007) to draw a better conclusion. The
short term performance has been calculated by using the traditional method,
i.e. the difference between the closing price on the first day of trading and
offer price and divided by the offer price.

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A. Gompers and Josh Lerner (2003). The Really Long-Run Performance of Initial
Public Offering. The Journal Of Finance.
This paper has sought to assess the performance of IPOs by examining the period
before the creation of Nasdaq. The author says that by considering a period
where returns of IPOs have not been systematically examined, we hope to shed
light on whether the poor performance is driven by some fundamental behavioral
anomaly or rather is just an idiosyncratic feature of the recent time period
that has been the focus of prior academic studies. Pre-Nasdaq IPOs represent a
potentially powerful out of-sample test of IPO underperformance. Most papers
that examine IPO performance in other countries, as works such as Rouwenhorst
(1998) highlight, may be finding similar patterns because of common economic
factors or common investor biases across countries at the same time. In a
sample of 3,661 IPOs between 1935 and 1972, we find underperformance when event
time buy and hold abnormal returns are used, but even this result is not
consistently statistically significant. The underperformance disappears when we
use cumulative abnormal returns. A calendar-time analysis shows that IPOs
return at least as much as the market over the entire sample period. Finally,
the intercepts in CAPM and Fama-French three-factor regressions are insignificantly
different from or even greater than zero. In short, the relative performance of
an IPO sample depends on the method of examining performance. One methodology
suggests that this sample underperforms; others suggest superior performance.
Our analysis of pre-Nasdaq IPOs serves to underscore the questions about IPO
performance raised in Brav and Gompers (1997). The weakness of the evidence for
underperformance and the failure to observe a consistent pattern raise doubts
about whether a unique IPO effect indeed exists. Is there a real behavioral
anomaly at work here, or rather is the poor performance of the offerings in the
Nasdaq era simply a historical accident? Fama (1998) suggests that spurious
anomalies can be anticipated when stock returns are examined repeatedly.
Alternatively, systematic underperformance may be present in the data, but this
systematic underperformance would then affect a much larger class of companies.
Future tests of market efficiency need to look beyond individual anomalies and
address broader market movements if they are to shed more light.

Dorn (2009). Does Sentiment Drive the Retail Demand for IPOs? Journal of Financial and Quantitative
Analysis. The main focus to infere if sentiment drives the demand for
IPO’s. Based on his findings the author concludes that sentiment drives IPO
purchases made by a sample of clients at a German retail broker. This can be
inferred from the clients’ willingness to trade against institutional investors
in the WI market and pay a substantial WI premium relative to prices in the
immediate aftermarket. The inference that investors act on sentiment is
therefore not based on long-horizon returns as in prior work. Although the
period during which I observe individual-level WI transaction data only spans
August 1 999 to May 2000, the poor performance of retail investors in the WI
market can be confirmed out of sample, using publicly available WI data
provided by a leading WI market maker for the subsequent period from June 2000
to April 2001 . Specifically, I document that retail investors remain willing
to pay the WI premium even after the crash of mid-2000. This suggests that
sentiment investors do not simply disappear during periods of poor returns. The
poor performance of IPOs aggressively bought by retail investors, either in the
WI market or in the aftermarket or both, is consistent with retail sentiment
initially pushing aftermarket prices above fundamental values. In particular,
variation in retail IPO purchases explains variation in aftermarket returns
during my sample period, after controlling for IPO characteristics that have
been previously related to aftermarket returns.

Aalaa J.Haji and Deepha.B (2016) talk about the importance of initial public
offerings worldwide as a source of funds for the companies to accelerate their
growth by using the mobilised funds to implement innovative strategies as well
as its consideration as an important tool for investment since it offers huge
profits on the listing day. In this study the short run performance of the
companies is analysed to understand the anomaly of abnormal returns as well
long term performance to analyse the performance of the IPO’s in the long run.
This study further talks about the added pressure of the market faced by the
companies which decide to go public which may cause them to focus more on
short-term results rather than long-term growth. “The actions of the company’s
management also become increasingly scrutinized as investors constantly look
for rising profits. This may lead management to perform somewhat questionable
practices in order to boost earnings. Before deciding whether or not to go
public, companies must evaluate all of the potential advantages and
disadvantages that will arise and fix prices that are in the best interest of
the company and investors”. This study helps the investor to decide the
suitable investment strategy to get maximized returns.

Hema Divya (2013) states that a major source of business financing is through
Initial Public Offerings (IPOs). Historically, IPOs received high initial first
day gains compared to the market performance. These gains reflect external
factors and do not show the true value of the company thereby giving evidence
of an under-priced IPO. The recent researches on IPOs in different markets for
different industries in various countries have focused on under-pricing and
show that the under-pricing is evident in case of book-building route as well
as fixed price-band offers. The study defines under-pricing as pricing of an
initial public offering below its market value. When the offer price is lower
than the price of the first trade, the stock is considered to be under-priced.  A stock is usually only underpriced
temporarily because the laws of supply and demand will eventually drive it
toward its intrinsic value. It defines overpricing as the difference between
the offer or opening price for the IPO’s stock and its closing price after the
first day of trading scaled by the offer price. When the opening price exceeds
the closing price, the IPO is said to be overpriced. The research concluded
that “The empirical literature is now fairly mature in claiming sufficient
evidence for the underpricing of IPOs. Broadly speaking, some sort of
underpricing for IPOs is reported in every capital market globally. The
remarkable empirical regularity inspired large sections of theoretical
literature to explore the underlying rationality behind underprice. Studies on
IPO underprice can be grouped under four different broad headings: (a)
Information asymmetry; (b) Institutional reasons; (c) Control considerations;
and (d) Behavioral approaches.

A. S. Ambily, Gayatri Krishna, Aswathy K and Deepa Balakrishnan (2016) studied
the performance of IPO’S from issue price to last trade price in India during,
2013 to 2015, listed in National Stock Exchange(NSE) India. Initial Public
Offering means when a company sells its share or offer its share in pubic for
the first time. The offer generally issued by the new and smaller companies to
expand their capital but it can also be done by the large privately companies
to become public company. The data for the study is mainly collected from NSE
website. The analysis is based on the companies listed under NSE during the
years 2013 to 2015. The secondary data was collected from the various sources
available like websites wherever necessary. The study defines Issue Price as
“the price at which a companies shares are offered to the market for the first
time, which might be at par or at a premium or discount. When they begin to be
traded, the market price may be above or below the issue price”. According to
this study the last traded price is “the last closing price, last traded time
is the time at which transaction occurred, Volume is the number of shares
traded and also may be the value of the stocks, Open the price opened, High,
Low the price for the day / for 52 weeks, Previous day closing”. The study
found that the investment done in the securities by the investors is mainly
done only by the image of the company but not on the basis of the fundamental
analysis. Most of the investors always prefer to purchase at a lower rate when
issue price and last trade price is compared. The average difference for the
year 2013 regarding IPO’s performance from issue price to last trading price is
114.83 percent. The average difference for the year 2014 regarding IPO’s
performance from issue price to last trading price 53.625 percent. The average
difference for the year 2015 regarding IPO’s performance from issue price to
last trading price 21.42 percent. The percentage return shows the return for a
particular period of time. The last trade price will always be higher than the
issue price.

Bateni and Farshid Asghari (2014) focus their study on the main question
whether pricing the initial offering exchange on Tehran stock exchange is less
than actual and what factors affect pricing of initial shares on stock
exchange. For this purpose, 115 stock exchange companies from 2006 to 2012 were
studied. Data gathered from these companies were analyzed with SPSS. Results
indicated that only P/E variable has a significant relation with price changes
on initial offerings and had highest impact on price of initial offerings. A
1999 study by Criegman believes company’s first day transactions indicate
share’s future performance and he categorize shares to 4 types: 1.cold 4.very hot. Shares with 10-60% efficiency on the first day are
categorized as hot shares, these shares have highest offering requests thus
some applicants can’t afford this shares therefore demand shares in higher
prices. Hot initial public offerings have high future performance (price
increase) while abnormality return of cold offerings is equal or lower than
zero and its future performance is weak (price reduction). Very hot offering is
when share’s initial return is more than 60% and its future performance will be
serious. According many conducted researches on different countries,
underpricing and price drop in long-term or long-term performance phenomenon
have occurred (as cited in Leila Bateni and Farshid Asghari, 2014). This study
defines underpricing as the phenomena when the publishing company on the first
day, offers its shares very lower than its true value leading to massive return
gain for buyers. The study concluded that “In Iran’s stock exchange average
days that price is stabilized is 287 days. This number is a very high amount
comparing to other countries, one of its reasons is investment market
efficiency, the more market is efficient, information transfer is done with
more clarity thus, shares initially offered will be transacted with price close
to its actual price and it takes less time for initially offered shares to
reach stabilized price in market.

Khan Adil Mushtaq (2014). Factors
that Influence the performance of initial public offering at the Nairobi
securities exchange in Kenya. School of Business, University of Nairobi. This
study focuses on the factors that influence the performance of initial public
offering in the Nairobi Securities Exchange. The objectives of the study were
to determine; the relationship between sales volume turnover, the relationship
between profitability and the relationship between asset base and the
performance of initial public offering. The study adopted a descriptive
research design. The sample size of the study was 8 companies who issued
initial public offering between the periods of 2001-2011 and were listed at the
Nairobi Securities Exchange. The data obtained was analyzed using the multiple
regression analysis method through the use of statistical package for social
sciences (SPSS) which was applied to code, enter and compute measurements of
the multiple regressions for the study. The research further revealed that the
regression model predicting the relationship between the IPO performance and
the independent variables deduced that holding all the other factors constant,
a unit increase in asset base would lead to an increase in IPO performance, a
unit increase in sales volume turnover would lead to a increase in IPO
performance and a unit increase in profitability would lead to a decrease in
IPO performance. From the study conducted it can be concluded that the
variables which were under study (profitability, asset base and sales volume
turnover) played a small role in influencing IPO From the study conducted it
can be concluded that the variables which were under study (profitability,
asset base and sales volume turnover) played a small role in influencing IPO.


Pritpal Singh Bhullar, Dr. Dyal Bhatnagar , Analysis of Factors affecting Short
term Performace of IPO’s,  Pacific
Business Review International Volume 7, Issue 5, November 2014..Initial
Public Offer (IPO) plays a role of new blood in the nerves of amis as the amis try to raise funds for their forthcoming
ventures through IPOs. This paper examines the one year
and six month performance of lPOs launched by companies
ofvarious sectors during year 2007 to year 20 12. The study comprises of
comparative analysis of the perfomiance of the IPOs in temps of average retum
to that of Sensex pertaining to all companies of various sectors of Indian economy. Multiple regression has been used to
analyze the impact of various independent variables on the IPO retum for 6
months as well as I year. Independent variables like Oversubscription of IPOs, time delay in IPO listed, IPO offer
Price, Market return in terms of Sensex return for the same time performance.The
analysis highlights the impact of various factors on IPO performance on short
term basis. Research methodology was somewhat as. For the research, 265 companies
(Sample size) have been considered which have launched their IPOs in 6
years from year
2007 to year 20 12 (time period of research study). 5 independent variables
(Market return for 6 months and year from date of listing, No. of times IPO
is subscribed, IPO Issue Size, Time delay between IPO offer closing date and
listing date, IPO Price) have been considered whereas 2 dependent variables
(IPO return for 6 months and IPO return from I year from date of listing) have
been considered. For the analysis, statistical techniques like multiple regression and rate of return have been used to
analyse the impact of independent variables on dependent variables. Return One
year return of companies as well as Sensex has been calculated by following formula (Today’s closing price Yesterday’s closing
price) /Yesterday’s closing price)* 100 Hypothesis

In nutshell, we can say that short term performance
of IPO influenced
by no. of times IPO
subscribed, time delay between offer losing date and listing date and
size of IPO issue. Macroeconomic factors like Euro debt crisis. Political unrest in Egypt, I.JS’s fragile economy,
increase in commodity
prices were the major global factors that dent the performance of different Indian sectors during
the study period.
Indian macroeconomic factors which affected the performance were food inflation, hike in oil
prices, increase in policy rates by RBI, Free flow in stock market, Rupee depreciation, financial scams and sentiments of
Indian investors etc.


Tian 2012, An Examination of factors influencing under pricing of IPO’S on the
London stock exchange, MFIN 6692, September 2012, Saint Mary’s University. The
mis pricing of IPOs has been widely examined in studies. According most
research findings, IPOs on average, are underpriced in the short-run and
correctly priced in the long-run. The purpose of this paper is to prove how the
underpricing of IPOs on the London Stock Exchange is affected by issue size,
firm age, systematic risk, underwriter reputation, P/E ratio, debt ratio, and
ROA. Research has found the degree of underpricing on the London Stock Exchange
market is 6.89744%. The result of this research reveals that issue size,
systematic risk, and debt ratio influence the underpricing of IPOs. The large
volume of issue size usually contributes to a lower degree of underpricing.
lained by asymmetric information. Specifically, the extent that insiders care
about the underpricing of IPOs depends on how much they sell in the initial
offerings. The more shares they sell the stronger the incentive to incur the
costs of promoting the issue and generating the information to reduce their
underpricing-related wealth losses. This study examines the degree of
underpricing of IPOs in the London Stock Exchange. The underpricing is observed
in the London Stock Exchange with the average abnormal return of 6.89%. The
result shows that IPOs have statistically significant first-day return in line
with the underpricing of IPOs. This paper investigates possible explanations to
the degree of underpricing using the regression analysis. Six independent
variables were regressed against the degree of underpricing, including issue
size, firm age, risk, underwriter reputation, debt ratio, P/E ratio, and ROA.
Among all these six factors, we identify that in the London Stock Exchange,
issue size, risk, and debt ratio have significant influence to the pricing of
IPOs. Specifically, companies experience lower chance of mis pricing with large
issue size, which is contrary to the risk and debt ratio.. However, the
negative sign is consistent to the Hypothesis 4.All these results show that
large companies are found to be associated with a lower degree of underpricing.


Chen Litong 2015 . A Study on the
Influencing Factors of IPO Pricing and Policy Research in Chinese Stock Market,
International Conference on Education, Management and Computing Technology
(ICEMCT 2015).The stock market is of financing function. So the IPO is an
important financing channels and the rational use of this function determines
the healthy development of China’s capital market directly. The rationality of
IPO primarily reflects on the IPO pricing .By reviewing previous IPO pricing
theory , we establish the IPO pricing multi factor model and lead in
macroeconomic early warning index to model for the first time. The empirical
results validate the rationality of the model, and the relevant statistics
statistical test effect is good. The empirical results have positive reference
meaning to IPO pricing of our country stock market. Methodology framework
used, Persistence of “three high” problem in our country will
inevitably cause people to question the rationality of IPO in China. This
article chose 223 listed companies as the study sample range from 2011.1 to
2014.12. Method (5) IPO pricing is positively related with net assets per share
(?5> 0); Net assets per share reflects the present value of assets per
share. So when net assets per share is higher, the company’s operations will be
better with a high IPO pricing.