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SMART Journal of Business Management Studies
Year : 2014, Volume : 10, Issue : 2
First page : ( 77) Last page : ( 87)
Print ISSN : 0973-1598. Online ISSN : 2321-2012.

Under Pricing of Indian IPOs and ITS Determinants: An Empirical Analysis

Saravanan V1, Chandran Joji2

1Research Scholar, Research and Development Centre, Bharathiar University, Coimbatore, Tamilnadu, India

2Associate Professor, School of Business Leadership and Management, Karunya University, Coimbatore, Tamilnadu, India

JEL Code: D4, G1, G14

Online published on 9 September, 2015.


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, we used t-test. 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. We used regression model 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 investors can make their investment in new issues since the IPOs are under priced initially.



IPO, Under Pricing, Market Adjusted Abnormal Returns.


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