Underpricing of Ipos: The Indian Experience Over the Last Decade
32 Pages Posted: 20 Nov 2002
Date Written: October 3, 2002
Several papers have identified the uncertainty of the investors and signaling intentions of the issuers behind IPO underpricing. This paper tests the implications of these models for the Indian IPOs over the last decade. The empirical findings show that there exists positive relationship between IPO underpricing and ex-ante measures of risk proxies. It also shows that a subset of companies' decision to raise funds subsequently depended on the initial returns and/or on the aftermarket returns.
Keywords: IPO underpricing, uncertainty, market feedback hypothesis, secondary offerings, signaling hypothesis
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