| SMART JOURNAL OF BUSINESS MANAGEMENT STUDIES |
VOL. 10 |
NO. 2 |
PAPER 7 |
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UNDER PRICING OF INDIAN IPOs AND ITS DETERMINANTS: AN EMPIRICAL ANALYSIS
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| Saravanan.V* and Joji Chandran**
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| * Research Scholar, Research and Development Centre,
Bharathiar University, Coimbatore, Tamilnadu, India
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| ** Associate Professor, School of Business Leadership and Management, Karunya University, Coimbatore, Tamilnadu, India
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| This paper explores the initial return and the determinants of under pricing of 127 IPO companies during the period 2008-2012, listed in NSE India. The market adjusted abnormal returns (Initial Return) of all sample IPO companies were 7.5%. It shows that the new issues were initially under priced. In order to verify the returns statistically, the t-test was used. It was found that all sample IPO companies’ returns were significantly not equal to zero. According to this study, the mean initial return of 7.5% was a lower average return when compared to previous research. The regression model was used to analyze the relationship between the degree of under pricing with the explanatory variables such as issue size, listing delay, age of the firm and market index return on the day of listing. The results of regression show that there was no significant relationship between the degree of under pricing and the explanatory variables except the variable of age of the firm. The study suggests that the investors can make their investment in new issues since the IPOs are under priced initially. |
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