Performance Of Initial Public Offerings Research Articles

Pricing and performance of initial public offerings: directions for future research

Purpose This study aims to outline the research field of initial public offerings (IPOs) pricing and performance by combining bibliometric analysis with a systematic literature review process. Design/methodology/approach The study uses over three decades of IPO publication records (1989–2020) from Scopus and Web of Science databases. An analysis of keyword co-occurrence and bibliometric coupling was used to gain insights into the evolution of IPO literature. Findings The study categorized the IPO research field into four primary clusters: IPO pricing and short-run behaviour, IPO performance and influence of intermediaries, venture capital financing and top management and political affiliations and litigation risks. The results offer a framework for delineating research advancements at different stages of IPOs and illustrate the growing interest of researchers in IPOs in recent years. The study identified future research potential in the areas of corporate governance, earning management and investor sentiments related to IPO performance. Similarly, the study highlighted the opportunity to test multiple theoretical frameworks on alternative investment platforms (SME IPO platforms) operating under distinct regulatory environments. Originality/value To the best of the authors’ knowledge, this paper represents the first instance of using both bibliometric and systematic review to quantitatively and qualitatively review the articles published in the area of IPO pricing and performance from 1989 to 2020.

A Study on Short Term Performance of Initial Public Offerings (IPOS) Issued During 2021-22 And 2022-23

A Study on Short Term Performance of Initial Public Offerings (IPOS) Issued During 2021-22 And 2022-23

Operating performance of initial public offerings: empirical evidence from Oman

Operating performance of initial public offerings: empirical evidence from Oman

Understanding the Factors Influencing Pricing and Performance of Initial Public Offering: A Literature Review

Understanding the Factors Influencing Pricing and Performance of Initial Public Offering: A Literature Review

Operating performance of initial public offerings: empirical evidence from Oman

Operating performance of initial public offerings: empirical evidence from Oman

IPOs as Catalysts for Retail Investor Wealth Creation: Evidence from the Indian Stock Market

The study delves into the dynamics of wealth creation for retail investors in the context of Initial Public Offerings (IPOs) within the Indian equity markets. Against the backdrop of a burgeoning retail investor base, the research offers a comprehensive analysis spanning April 2012 to December 2022, evaluating short-term and long-term IPO performance metrics. The study reveals nuanced insights into wealth creation dynamics by scrutinizing listing day returns, first-week to third-year returns, and market-adjusted returns vis-à-vis the Nifty50 Index. Notably, the research suggests that while IPOs exhibit promise with positive listing day returns, sustaining growth over extended horizons poses challenges. The hypothesis of inflation serving as a pragmatic hurdle rate for retail investors is explored, offering a novel perspective on wealth preservation. It also sheds light on the significant variability in the Real Rate of Returns (RRRs) among IPOs, with some contributing to wealth generation while others result in wealth erosion. This underscores the importance of retail investors carefully assessing and managing risks, emphasizing the need for prudent portfolio diversification and effective risk mitigation strategies, particularly over longer investment horizons.

Short run performance of initial public offerings in Nepal

This paper examines the under-pricing and performance of IPO for six months period using the model of under-pricing. Overall, 67 samples are analyzed out of 120 population identified from the period of 2014/15 to November 2020/21 using judgmental sampling and removal of outlying observations. Firm size, subscription rate, issue size, age of firm, issue manager reputation and market condition are taken as independent variables. Nepalese investors mainly prefer microfinance sector for investment and tends to be underpriced for longer period due to high demand for share. Observations are classified into two categories based on mean value of each predicting variable and NEPSE index. Significant difference on initial as well as monthly return has been observed between categories of subscription rate (high versus low) and age (matured versus young). Highly positive and significant correlation between the issue size and firm size shows large firm issue IPO in large size and negative significant correlation between issue size and subscription rate shows when issue size is low there will be high demand for shares. Significant relationship of subscription rate and age of firm for initial and first month return has been observed whereas only subscription rate was found significant after second month to sixth month. Study concludes that subscription rate is major determinant of under-pricing of IPOs in the Nepalese Stock Market.

Performance of IPOs - A Detailed Analytical Study of IPOs During 2015-20

Initial Public offering (IPOs) are generally a first time offering of a company’s stock to the public. IPOs have had a strong significance all over the world as they act as an essential source of capital for companies to speed up their growth trajectory, as these funds help in the implementing new measures and strategic initiatives necessary for an unperturbed growth. This study includes the analysis of the performance of IPOs for the year [ 2015-2021] in detail and compares it with the short-term performance of a few select IPOs for the same range so as to understand which IPOs returns were more and is there any common factor leading to the same. The sample for this study includes all the IPOs listed in the Indian market for the selected year range. The resulting parameters of this study help in deriving the factors that led to the success or failure of IPOs in the market and provide a better understanding about the important factors involved throughout, Thus the results showcase factors such as brand awareness, Product placement and business models along with Investor sentiments are interconnected and have an effect on the performance of the IPOs. On the contrary, these findings help assess the current aspects of opportunities that lie in the IPO market with respect to long-term investments.

A Performance based Ranking of Initial Public Offerings (IPOs) in India

In recent times, Indian Stock Market (ISM) has been witnessing a surge in the number of IPOs listed in stock exchanges. However, in many occasions it has been noticed that post-listing performance of several IPOs are below par to the expectations of the investors. IPO performance has been one of the major concerns. In this context, the present paper endeavours to carry out a comparative performance assessment of a list of IPOs. We consider a period of three years after listing. Our sample consists of a list of IPOs having heterogeneous nature of business operations and introduced in 2018. We consider two aspects of the performance such as market-based indicators and fundamental efficiency in terms of profitability, liquidity and risk. For comparison, LOgarithmic Percentage Change-driven Objective Weighting (LOPCOW) is used. The study period is considered as Fy 2020-21. The results reflect that for IPOs, market performance does not necessarily because of the fundamental efficiency. Further, we notice that the nature of equity ownership does not influence the market performance significantly. We surmise that during initial years, the performance of the IPOs at the marketplace is more driven by speculations and short-term goals of the investors. The result of validation test indicates that the ranking using LOPCOW method is comparable and consistent with a widely used model like Entropy.

A COMPARATIVE ANALYSIS OF MACHINE LEARNING ALGORITHMS FOR IPO UNDERPERFORMANCE PREDICTION

Initial Public Offerings (IPOs) are a popular way for companies to raise capital and enter the public markets. However, many IPOs underperform and fail to meet the expectations of investors. In this research paper, we explore the use of different machine learning models, namely AdaBoost, Random Forest, Logistic Regression, ANN and SVM, for predicting IPO underperformance. We collect and pre-process a dataset of IPOs from the past few years, and use it to train and evaluate the performance of each model. Our results show that Artificial Neural Network model is better suited for predicting IPO underperformance. Additionally, our analysis provides insights into the factors that contribute to underperformance and highlights the importance of certain features in predicting IPO performance. Our research provides valuable information for investors and financial analysts interested in predicting the performance of IPOs and mitigating the risks associated with IPO investments. We have tested machine learning models, namely AdaBoost, Random Forest, Logistic Regression, ANN and SVM. After Comparing the accuracy of all the models, we arrived at the conclusion that ANN model performed the best with an accuracy of 68.11%.

From disclosure to sustainable performance: how corporate social responsibility disclosure impacts the long-term share price performance of Malaysian IPO

PurposeThis paper examines the relationship between the extent and quality of the four dimensions of corporate social responsibility disclosure (CSRD) namely community, environment, workplace and marketplace with the long-run share price performance of Malaysian initial public offering (IPO) companies.Design/methodology/approachThis study utilised secondary data by the content analysis of the annual reports and Datastream of 115 IPOs listed from 2007 to 2015 in Malaysia. The IPO’s performance was determined by calculating the return measures under the equally weighted and value-weighted schemes of the mean abnormal returns and buy-and-hold abnormal returns covering the three years post-listing using the event-time approach.FindingsThe findings demonstrate that Malaysian IPOs experience substantial overperformance and underperformance when both the IPO performance measures are benchmarked against the matched companies and market. The results indicated that the extent and quality of the community and environment CSRD dimensions are positively and significantly correlated to the IPO’s performance. On the other hand, the extent and quality of the workplace and marketplace CSRD dimensions are negatively and significantly correlated to the IPO performance.Practical implicationsMalaysian regulators could benefit from these findings in their endeavour to carry out a reform process on CSRD to improve its quality. The results of this study are important to investors, regulators, non-government organisations, communities and policymakers. They also enhance the understanding of companies about the importance of disclosing greater CSR information to improve their performance and profitability.Originality/valueTo the researchers' best knowledge, this study provides new insights into the association between CSRD and the performance of Malaysian IPO companies, which is considered important.

The impact of IFRS mandate and institutional governance on underpricing and aftermarket performance of IPO shares in Turkey

Along with the European Union, policymakers in Turkey passed a regulation that mandated all listed companies use the International Financial Reporting Standards (IFRS) starting from January 1, 2005. Using a before-after estimation design, this study examines the impact of this policy change and the role of institutional governance quality on the initial trading day and aftermarket trading performance of initial public offerings (IPO) in Turkey from 1998 to 2019. The results show that the IFRS mandate does not affect initial trading day returns but improves the aftermarket trading performance of IPO shares. This finding may imply that Turkey’s secondary market also suffers from information asymmetry and that IFRS-compliant reports help alleviate this problem. Furthermore, none of the six institutional governance quality measures tested loaded significantly against initial trading day or long-term returns. However, when examined together, two institutional measures with a negative value, voice and accountability, and political stability, offset the positive effect of the IFRS-compliant reporting on long-term IPO returns, providing support to the premise that institutional quality matters for realizing the economic benefits of the IFRS mandate.

IPO performance of portfolio ventures funded by impact investors versus venture capital investors

AbstractWith the global rise of impact investments to achieve societal goals, an increasing number of new ventures that aim to create societal impact now seek to go public. However, while many conceptual studies suggest that impact investors are less likely to pursue financially oriented exit plans in exchange for generating societal impact, there is little empirical evidence to back up this claim. Using a propensity score matching approach, we draw on data from Crunchbase and empirically compare the initial public offering (IPO) performance of a large sample of 3398 investments by impact investors with 3398 investments by matched venture capital (VC) investors. We find that impact investor investments are less likely to lead to an IPO than VC investments. Besides, our results indicate that syndication by impact investors increases the likelihood of an IPO. This suggests that companies funded by impact investors benefit more from syndication than their VC‐funded counterparts. Our findings have practical implications for impact investors, portfolio ventures, and policymakers.

Indian start-ups going public: return and volatility of stocks during bear and bull regimes

PurposeStart-ups are successful in receiving valuation in billions of US dollars prior to initial public offering (IPO). However, to sustain higher valuation, the stocks need to perform consistently after the IPO. Short-run stock performance of India-based start-ups during the first year of IPO listing from March 2021 to March 2022 is analysed.Design/methodology/approachThe paper deals with the new generation start-ups' stock performance in emerging market in terms of total and abnormal return generated in comparison to the market (NIFTY-200). Further, the volatility of returns during bear and bull regimes is analysed through a family of Markov-switching GARCH models using both normal and skewed distributions.FindingsThe results suggest that start-up stocks are more volatile during bear regime than in the bull run in market-based economies where price limit policy does not apply. Besides, the cumulative abnormal return over the market return was lower for majority of start-up IPO stocks.Social implicationsThough negative returns of the start-up stocks during the first year of IPO need not be surprising, higher volatility during bear regime is a matter of concern as it could severely impact retail investors and founders. The results hold implication for IPO regulation in emerging markets and for retail investors desirous of investing in start-up stocks.Originality/valueVolatility of return is examined using a state-space model during the first year of the start-up IPO listing. The study contributes to the emerging market IPO literature by examining IPO performance in market-based economy. Previous IPO performance studies in emerging markets are predominantly based on ecosystems where start-ups are subjected to price limit policy, and it does not reflect the true nature of IPO performance across emerging markets.

Sustainability reporting and corporate financial performance of IPOs: witnessing emerging market.

The objective of this paper is to investigate the impact of sustainability reporting (SR) quality on the corporate financial performance (CFP) of initial public offering (IPO) in Malaysia. This research applies the OLS and WLS regressions through content analysis of annual reports. The data was collected from Datastream, where 131 IPOs listed companies on Bursa Malaysia between 2007 and 2017. The findings indicate a positive and negative association between SR and its components with CFP. It is found that there is a negative and significant association between the SR characteristics of employees and products with CFP. However, it was discovered that the societal and environmental components have a significantly positive association with CFP. This finding shows that SR practices might be seen as an attempt to enhance IPO performance. The findings can facilitate financial institutions and regulatory agencies in driving responsibility on the part of companies regarding SR issues. The firms should involve SR practices in their SR decisions. Thus, this study emphasises the significance of combining social and organisational activities.

Factors affecting IPO Performance in the Stock Market: An Analytical Perspective

Initial Public Offerings (IPOs) have long been considered a crucial step in a company'sgrowth trajectory. IPOs offer an opportunity for companies to raise capital and expand theirbusiness operations. However, the success of an IPO is not guaranteed, and several factorscan impact its performance in the stock market. This study seeks to explore the factors thatcan affect IPO performance from an analytical perspective. The economic conditionsprevailing at the time of an IPO can have a significant impact on its performance. Factorssuch as inflation, interest rates, and GDP growth can influence investor sentiment and, inturn, impact IPO performance. Similarly, industry-specific factors such as competition,technological changes, and regulatory changes can also impact IPO performance. Companyspecific factors such as financial performance, management quality, and growth potential canalso play a critical role in determining IPO success. Furthermore, the regulatory environmentsurrounding IPOs, including legal and compliance requirements, can affect investor sentimentand the success of an IPO. Through an analytical approach, this study aims to identify andanalyse the critical factors that can impact IPO performance in the stock market. The researchcan provide valuable insights into the underlying mechanisms driving IPO performance andcan be useful for investors, issuers, and policymakers in making informed decisions regardingIPO investments and regulations.

Corporate culture and IPOs

AbstractThis study documents corporate culture at the time of initial public offering (IPO) and the relationship between corporate culture at the time of IPO and firm financial performance. Based on a sample of 1157 US firms that went public between 1996 and 2011 and performance information through 2016, the data provide strong evidence that regional culture, industry characteristics, and pre‐IPO financing play key roles in explaining a firm's cultural orientation. Moreover, the data indicate that IPO firms with a highly competition‐ and creation‐oriented culture experience higher profitability and less risk of financial distress than other IPO firms.

Investor attention and IPO returns: evidence from Indian markets

PurposeThe regulatory design of Indian stock market provides us with the opportunity to disaggregate initial returns into two categories, i.e. voluntary premarket underpricing and post market mispricing. This study explores the impact of investor attention on the disaggregated short-run returns and long-run performance of initial public offerings (IPOs).Design/methodology/approachThe study employs regression techniques on the sample of IPOs listed from 2005 to 2019. It measures investor attention with the help of the Google Search Volume Index (GSVI) extracted from Google Trends. Along with GSVI, the subscription rate is used as a proxy to measure investor attention.FindingsThe empirical results suggest a positive and significant relationship between initial returns and investor attention, thus validating the attention theory for Indian IPOs. Furthermore, when the returns are analysed for a more extended period using buy-and-hold abnormal returns (BHARs), it was found that price reversal holds in the long run.Research limitations/implicationsThis study highlights the importance of information diffusion in the market. It emphasizes the behavioural tendency of the investors in the pre-market, which reduces the market efficiency. Hence, along with fundamentals, investor attention also plays an essential role in deciding the returns for an IPO.Originality/valueAccording to the best of the authors’ knowledge, this is one of the first studies that has attempted to explore the influence of investor attention and its interplay with underpricing and long-run performance for IPOs of Indian markets.

Evaluation of Nexus Between Short-Run Return Measures of IPOs in India

Purpose : This study aimed to provide a better understanding of the initial performance of initial public offerings (IPOs) on the day of listing by separating the gains on the listing day into primary and secondary market returns. An industry-wise evaluation of different return measures was done, and a year-on-year analysis was also conducted to understand more about the underpricing anomaly of IPOs. Methodology : The short-run IPO performance was analyzed using market-adjusted average returns (MAAR), focusing on the role of different factors in determining underpricing. The initial returns were divided into primary and secondary returns, and a sectoral analysis was conducted to evaluate the behavior of IPOs on the first day of trading. The quantitative analysis considered the returns from the issue date to the listing day opening price and compared the listing day opening and closing prices of all sample IPOs. Findings : The sectoral analysis revealed a reversal of the level of underpricing during the secondary market, which explains the listing day performance of IPOs under different industries over the last decade. According to the findings of this study, the subscription rate is a major determinant of short-run IPO performance. Practical Implications : To improve the short-run performance of IPOs, issuers should focus on increasing their subscription rates. This study recommended that corporations should publish credible, accurate, and adequate information and invite active participation from shareholders. Originality : Unlike prior research on IPOs, this study separated listing day gains into primary and secondary market returns, carried out an industry-wise evaluation of different return measures, and analyzed IPO behavior on the first day of trading to provide improved insights into the underpricing anomaly of IPOs.

Community and environment disclosures and IPO long-run share price performance

Purpose This paper aims to examine the relationship between the community and environment disclosures and the long-run share price performance of Malaysian initial public offering (IPO) companies. Design/methodology/approach This study used secondary data through the content analysis of the annual reports and DataStream of 115 sampled IPOs listed on Bursa Malaysia from 2007 to 2015. The present study incorporated weighted least squares and quantile least squares to evaluate the relationship between the community and environment disclosures and IPO performance. Findings The results show a positive and significant relationship between the extent and quality of community disclosures and IPO performance; while the extent and quality of environment disclosures have a negative and positive relationship, respectively, with IPO performance. These results suggest that community and environmental activities can be considered an effort to enhance Malaysian IPOs. Practical implications These results suggest that Malaysian IPO companies should be involved consistently in corporate social responsibility disclosure, i.e. community and environmental activities, as they have a significant impact on the performance of Malaysian IPOs. The findings can facilitate financial institutions and regulatory agencies in driving companies to be more responsible regarding community and environmental disclosures. Originality/value To the best of the authors’ knowledge, this study provides new insights into the relationship between the community and environment disclosures and the performance of Malaysian IPO companies.