Survey on Ipo underpricing in the Istanbul Stock Exchange

Abstract

Literature suggests that initial public offering (IPO) underpricing is related to information asymmetry, signals conveyed by the issuers, intention of the issuers to raise additional funds through seasoned offerings, existence of agency costs between executives and shareholders, the bankers’ reputations and hot issue markets. This study tests whether the perceptions of market participants regarding these underpricing issues in an emerging market context confirm the international empirical evidence or not. One advantage of measuring the perceptions is that immeasurable factors that are explored through proxies in empirical studies - such as information asymmetry - can be directly surveyed. Findings reveal that among the two types of market participants (market professionals and public company executives) market professionals have a better insight into IPO dynamics. Theoretical expectations and previous empirical findings for hypotheses relating directly or indirectly to information asymmetry and signaling theory in IPO underpricing are confirmed especially by the perceptions of market professionals