Performance Of Initial Public Offerings Research Articles

The Impact of Financial Disclosure on Stock Performance of Initial Public Offerings in the Indonesian Capital Market

This research aims to explore whether the proceeds, age, revenue, and underwriter rating of IPO companies affect disclosure; whether disclosure mediates the relationship between the four exogenous variables and underpricing; and whether underpricing mediates the relationship between disclosure and returns. This research uses Partial Least Squares Structural Equation Modelling (PLS-SEM) as the data processing method. Since this research examines interactions between variables, PLS-SEM is an effective data processing method. This research identifies four key exogenous variables: funds raised from the IPO, the age of the IPO company, the income of the companies prior to the IPO, and the ranking of underwriting companies. The research finds that the R-squared of the disclosure variable is 0.0037, or 3.7%, while the Q-squared of the disclosure variable is 0.0039. Meanwhile, the R-squared of the underpricing variable is 0.435, and the Q-squared of the underpricing variable is 0.456. The research also finds that higher proceeds, age, revenue, and underwriter ranking of IPO companies will reduce disclosure. Conversely, higher proceeds and age of the IPO companies will reduce underpricing, while higher revenue and underwriter ranking of the IPO company will increase underpricing. Finally, the research finds that higher disclosure will increase underpricing. Статтю розміщено в рамках грантової програми ГО «НАУКОВО-ОСВІТНІЙ ІННОВА-ЦІЙНИЙ ЦЕНТР СУСПІЛЬНИХ ТРАНСФОРМАЦІЙ» за підсумками Конкурсу індивідуальнихгрантів «Ініціатива підтримки науковців»

Assessing the Performance of Initial Public Offerings (IPOs) in Indian Stock Markets: A Longitudinal Study from 2014-2023

This research investigates the performance of Initial Public Offerings (IPOs) in the Indian stock market over a decade (2014-2023). The study aims to assess both short-term and long-term IPO returns and the factors influencing their performance. Using a quantitative, longitudinal approach, data was collected from the National Stock Exchange (NSE) of India, covering 500 IPOs. The analysis examines short-term listing day returns and long-term performance up to five years post-IPO, focusing on variables like firm size, market sentiment, and sector-specific dynamics. The findings reveal substantial variations in IPO performance, with average listing day returns ranging from 18.98% to 26.35%, particularly peaking during market volatility in 2020. However, long-term returns exhibit a decline, with many IPOs underperforming five years after listing. Regression analysis shows that firm size and market sentiment significantly affect IPO performance, with larger firms and favorable market conditions driving better outcomes. The technology and pharmaceutical sectors outperformed, while real estate IPOs lagged. The study highlights the importance of due diligence for investors and the need for continued regulatory reforms to improve market transparency and efficiency. This research fills a gap in the literature by providing a comprehensive, decade-long perspective on IPO performance in India.

A study of the influence of family involvement on the IPO performance of Korean start-ups

ABSTRACT This study examines what types of abilities of the top management team influence the market value at initial public offering (IPO) and especially focuses on how family involvement influences the effect of top management on the market value at IPO. As a result, first, the more top managers with the output function background or the relevant industry experience the top management team has, the higher the market value at IPO is. Second, the more family members participate on the board of directors, the stronger the impact of the top management team’s output function background or relevant industry experience on the market value at IPO.

Underwriting syndicate structure and foreign IPO underpricing: A team production perspective

Grounded in team production and agency theory, we investigate investment bank opportunism in the context of 466 foreign initial public offerings (IPOs) in U.S. equity markets from 2009 to 2023. Findings reveal that IPO underpricing is higher for foreign firms underwritten by larger and more diverse syndicates owing to concerns about free-riding and moral hazard. Our results are robust to a series of sensitivity tests. Moreover, frequent foreign IPOs by home-country firms and strong home-country legal protection for investors attenuate the positive relationship between underwriting syndicate size and diversity and IPO underpricing. By delineating the collaborative nature of IPO underwriting, this study offers new insights into the implications of syndicate structure for foreign IPO performance.

Global dynamics of the IPO market: structural analysis and growth prospects

The global IPO (Initial Public Offering) market continues to play a critical role in raising capital for companies across various economic sectors. However, its dynamics remain ambiguous due to cyclical fluctuations driven by economic, financial, and regulatory factors. The relevance of this topic lies in the increasing importance of understanding the forces shaping IPO success, given the globalization of financial markets and growing competition. A thorough examination of the factors that determine IPO performance and the future prospects of this mechanism is vital for stakeholders.The purpose of this paper is to conduct a comprehensive structural analysis of the global IPO market's dynamics, identify the key drivers of its development, explore regional differences, and assess the market’s growth potential amid ongoing global transformations. The focus of the study is the global IPO market, with particular attention to its economic, financial, and regulatory dimensions.The methodological approach centers on structural market analysis, utilizing statistical and comparative methods to explore market dynamics across different regions. The research is further grounded in an analysis of macroeconomic indicators, regulatory changes, investment trends, and technological advancements that influence the IPO market.This study examines the impact of financial market globalization, regulatory adjustments, and technological innovations on the development of IPOs in various regions worldwide. The role of macroeconomic stability, interest rates, and market volatility in shaping IPO demand is also explored. In addition, the research delves into sectoral differences and regional trends, particularly the activity of IPO markets in the U.S., Europe, and Asia.The conclusion addresses the growth prospects of the global IPO market amid continuous shifts in the global economy and provides practical recommendations for companies considering public offerings and investors interested in IPO market opportunities. The study highlights how firms can navigate these volatile conditions and what investors should consider when participating in IPOs.

Media Sentiment and Its Role in Shaping IPO Performance

The media performs an essential role in providing information regarding initial public offerings (IPOs) to investors. Often, public information about IPO companies is scarce and investors find it difficult to comprehend complex documents, making media a cost-effective and authentic source of information. This study explores how media sentiment affects the underpricing and initial aftermarket performance of IPOs using 3,124 media articles published from April 2019 to March 2022. In doing so, the authors employed textual sentiment analysis using the Loughran and McDonald dictionary to deduce the media net sentiment score. Subsequently, robust regression is conducted by incorporating the media sentiment, the volume of media articles, and other control variables. The result mentions that the way media present information has the potential to influence the decision of retail investors. The net sentiment score shows that the positive information in the media article makes investors optimistic about the prospects of the business. It boosts their confidence and creates more demand for shares, thereby increasing the IPO’s first-day market-adjusted abnormal return. Further, it has been discovered that media sentiment significantly influences initial aftermarket performance primarily due to the limited trading history available for the IPO company during the initial stage.

DETERMINANTS OF THE LONG-TERM PERFORMANCE OF MALAYSIAN INITIAL PUBLIC OFFERINGS

This study examined the determinants of the long-term performance of 351 initial public offerings (IPOs) launched in Malaysia overthe 2002–2010 period. This paper used a panel regression analysis framework based on the ordinary least squares (OLS) technique toexamine the potential determinants of IPOs’ long-term performance. The findings revealed that the volatility of aftermarket returns, the dummy ACE market and concentration ownership significantly influence the long-term performance of Malaysian IPOs. This paperoffers important implications specifically for investors as the findings can help them understand more about public companies’ long-term performance and how to better predict their performance.

Impact of post-IPO investments on the long-term financial market performance of Japanese IPOs: A preregistered report

This pre-registered report seeks to understand how investments made after a firm's initial public offering (IPO) impact its long-run IPO financial performance. That IPOs substantially underperform three to five years after going public (Loughran and Ritter, 1995) has been much debated with various factors implicated in causing the “new issues puzzle”. However, few studies focus on how firms actually spend their IPO capital and the associated impacts of those choices on long-term performance. By empirically testing the impact of the actual “use of proceeds” by newly public IPOs, the proposed study will bridge this gap. It can also inform corporate decision making by addressing how spending on debt repayment, fixed assets, working capital, and investments in shares, as well as investments in shares of stock, secondary stock, and foreign direct investments impact a firm's long-term financial market performance.

Diversity of Institutional Investors’ Bidding Opinions in Shaping the Sustainability of IPO Performance

In this study, we leverage a comprehensive dataset of over 3.8 million bid entries from institutional investors participating in China’s capital market to investigate the determinants of heterogeneous bidding behavior among these investors and the subsequent economic outcomes. We evaluate the sustainability of initial public offering (IPO) performance through three interrelated metrics: post-IPO stock price performance, financial accounting performance, and environmental, social, and governance (ESG) performance. Our analysis reveals a pronounced positive association between the quality of firms’ pre-IPO and the recent reforms to the bookbuilding mechanism in China’s capital market, as well as the level of diversity in institutional investors’ bidding opinions. After accounting for these factors, we focus on the nexus between the diversity of bidding opinions and the sustainability of IPO performance. The empirical evidence indicates that a higher degree of diversity in bidding opinions is inversely related to firms’ post-IPO stock price performance, financial accounting performance, and ESG performance. Further mechanism tests suggest that this diversity leads to a depletion of medium- to long-term share price performance by intensifying market sentiment; impedes the enhancement of financial accounting performance by reducing the capital raised during the IPO; and negatively impacts ESG performance by constraining the firm’s ability to fulfill its corporate social responsibilities. These findings challenge the assumption that diversity of opinion is always beneficial. The insights gained from this research have significant implications for the sustainable growth strategies of listed companies in emerging markets.

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.