IPO Underpricing: A Meta-Analysis and Research Synthesis

2003 ◽  
Vol 27 (3) ◽  
pp. 271-295 ◽  
Author(s):  
Catherine M. Daily ◽  
S. Trevis Certo ◽  
Dan R. Dalton ◽  
Rungpen Roengpitya
Keyword(s):  
Initial Public Offerings ◽  
Meta Analysis ◽  
Research Synthesis ◽  
Future Research ◽  
Popular Press ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Factors Associated ◽  
Significant Relationships ◽  
Dot Com

Initial public offerings (IPOs) have been a prominent focus of academic and popular press attention, especially in recent years. Much of this attention can be attributed to the increase in IPO activity as a function of the “dot com” phenomenon. Of particular interest to both academics and practitioners is IPO underpricing. Review of existing research suggests little consensus regarding those factors associated with underpricing. We provide a meta-analysis of published studies. Our findings reveal a number of significant relationships, many of which are opposite that predicted by signaling theory. Implications of these findings for practice and future research are discussed.

IPO Underpricing: A Meta–Analysis and Research Synthesis

2003 ◽  
Vol 27 (3) ◽  
pp. 271-295 ◽  
Author(s):  
Catherine M. Daily ◽  
S. Trevis Certo ◽  
Dan R. Dalton ◽  
Rungpen Roengpitya
Keyword(s):  
Initial Public Offerings ◽  
Meta Analysis ◽  
Research Synthesis ◽  
Future Research ◽  
Popular Press ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Factors Associated ◽  
Significant Relationships ◽  
Dot Com

Initial public offerings (IPOs) have been a prominent focus of academic and popular press attention, especially in recent years. Much of this attention can be attributed to the increase in IPO activity as a function of the “dot com” phenomenon. Of particular interest to both academics and practitioners is IPO underpricing. Review of existing research suggests little consensus regarding those factors associated with underpricing. We provide a meta–analysis of published studies. Our findings reveal a number of significant relationships, many of which are opposite that predicted by signaling theory. Implications of these findings for practice and future research are discussed.

IPO Underpricing across Different Sectors in India from 2010-2020

2021 ◽  
pp. 337-345
Author(s):  
Lakshay Khandelwal ◽  
Aditi Agarwal
Keyword(s):  
Standard Deviation ◽  
Initial Public Offerings ◽  
Weighted Average ◽  
Weighted Mean ◽  
Ipo Underpricing ◽  
Consumer Durables ◽  
Engineering Construction ◽  
Public Offerings ◽  
Short Period ◽  
Indian Stock Market

In this paper, underpricing of Initial Public Offerings across thirteen different sectors in the Indian stock market have been analyzed, during the period 2010–2020 (Data available till 31st October 2020). A sample of 129 companies, having an issue size greater than INR 100 crores, was examined and analyzed through IPO listing gains, weighted mean, standard deviation and coefficient of variation. The study shows that Retail, FMCG and Consumer Durables industry was underpriced the most while Engineering, Construction and Infrastructure industry issues were underpriced the least or overpriced. It was also found that Initial Public Offerings (IPOs) could be a window to make immediate gains in a very short period of time if thorough analysis of the issues and the market conditions is performed. Furthermore, it was observed that the first day return of the companies varies highly and cannot be fairly predicted by the weighted average first day return of the respective sector.

scholarly journals An empirical study of IPO underpricing: Evidence from Chinese stock market

2014 ◽  
Vol 12 (1) ◽  
pp. 139-152 ◽  
Author(s):  
Tianxiang Xu ◽  
Yujie Zhao
Keyword(s):  
Empirical Study ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Chinese Stock Market ◽  
Short Term ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Public Offering ◽  
Different Characteristics

Initial public offerings, as one of the most important activities for firms, have raising massive amount of researches. Regarding China, the stock markets are experiencing a massive level of IPO underpricing, which leads to trillions of dollars leaved on the table. This study is conducted for the question why Chinese IPO are so heavily underpriced and the determinants of IPO underpricing, also the possibility of IPO be underpriced in China. We confirm again that Chinese IPOs are heavily underpriced and the average underpricing level is about 110%. Further, Chinese IPO will experience a negative short term return starting from 10 days after listing, and there are significantly different characteristics for state owned IPOs and private IPOs. This study finds that information asymmetry, proportion of state owned share and risk are the mainly determinants of IPO underpricing in China. Additionally, one of the biggest reason that Chinese initial public offering is underpriced so much is because of government participation, since we find that firms with larger proportion of government state owned shares will be more underpriced.

scholarly journals Review of short-run performance of initial public offerings in Australia

2021 ◽  
Vol 18 (2) ◽  
pp. 188-200
Author(s):  
Lutfa Tilat Ferdous ◽  
Niroshani Parahara Withanalage ◽  
Abyan Amirah Qamaruz Zaman
Keyword(s):  
Regression Analysis ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Secondary Market ◽  
Publicly Traded ◽  
Ipo Underpricing ◽  
Secondary Markets ◽  
Public Offerings ◽  
Short Run ◽  
Total Market

This study investigates the short-run performance of initial public offerings in Australia. Based on sources from the Morningstar DatAnalysis database, we analyzed 211 Australian publicly traded initial public offerings (IPO) listed on the Australian stock exchange between January 2011 and December 2015 using multiple regression analysis with dummies to represent industry and listing year. According to our analysis, total market return indicates an IPO underpricing phenomenon whereas secondary market shows an overpricing scenario. Moreover, this analysis supports the contention that short-run performance fluctuations were based on the listing year and industry settings. This study contributes to the literature by analysing the short-run performance of both the primary and secondary markets

scholarly journals The two-tier board system and underpricing of initial public offerings: Evidence from Austria

2014 ◽  
Vol 12 (1) ◽  
pp. 352-362
Author(s):  
Lalith P. Samarakoon ◽  
Palani-Rajan Kadapakkam
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Supervisory Board ◽  
Board Structure ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Management Board ◽  
Board System

We study the relation between initial IPO underpricing and two-tier board structure in the Vienna Stock Exchange of Austria, where a two-tier board is mandatory for listed companies. The board ratio, defined as the size of the supervisory board to the management board, is used to capture the effect of two-tiered board on underpricing. The results show that the board ratio is negatively related with underpricing, consistent with the agency theory which predicts that more effective monitoring implied in a relatively larger supervisory board will lead to lower agency costs, and thus lower underpricing. The results are robust to the inclusion of control variables and suggest that firms seeking to raise external capital will be helped by adopting strong corporate governance standards.

The Influence of Firm Maturation on Firms' Rate of Adjustment to Their Optimal Capital Structures

2001 ◽  
Vol 23 (s-1) ◽  
pp. 70-94 ◽  
Author(s):  
Jeffrey A. Pittman ◽  
Kenneth J. Klassen
Keyword(s):  
Time Series ◽  
Initial Public Offerings ◽  
Future Research ◽  
Financial Policies ◽  
Cross Sectional ◽  
Public And Private ◽  
Public Offerings ◽  
Tax Shields ◽  
Optimal Capital ◽  
Refinancing Costs

Extant empirical research on firms' adjustment to their optimal capital structures is cross-sectional. However, Scholes and Wolfson (1989) argue that refinancing costs that accumulate with age increasingly impede firms from restoring their optimal capital structures. This study provides evidence on the time-series variation in the rate at which firms move toward their leverage targets that is consistent with this prediction. In separate tests, age is measured from two dates—from firms' initial public offerings and from their incorporation—to examine whether the duration of their public and private experience, respectively, affect the evolution in financial policies. This paper contributes to the literature by developing a research design that isolates the influence of dynamic refinancing costs on the leverage adjustment problem. The evidence also justifies future research on Scholes and Wolfson's (1989) predictions about the time-series pattern in firms' tax shields by empirically validating that refinancing costs increasingly constrain their capital structures.

Stage financing and syndication in the IPO underpricing of venture-backed firms: Venture capital and IPO underpricing

2019 ◽  
Vol 20 (4) ◽  
pp. 289-300 ◽  
Author(s):  
Awounou-N’dri Honorine ◽  
Dubocage Emmanuelle
Keyword(s):  
Venture Capital ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Capital Investment ◽  
Ipo Underpricing ◽  
Data Set ◽  
Public Offerings ◽  
Venture Capital Investment ◽  
Ipo Performance ◽  
The Impact

The article investigates the impact of stage financing and syndication practices on the underpricing level of venture-backed firms (VBFs) undertaking their initial public offerings (IPOs). This empirical study uses a unique hand-collected data set concerning more than 260 VBFs that went public on Euronext Paris and Alternext between 1997 and 2013. Our findings suggest a lower level of underpricing for firms backed by syndicated venture capital investment. Additionally, we find that the syndicate size is negatively associated with the level of underpricing. However, there is no evidence that stage financing has a significant impact. Syndication thus appears to be the only relevant mechanism to improve IPO performance (measured by the underpricing level), as it reduces agency costs and information asymmetry between the different stakeholders in an IPO process.

The Underpricing of Initial Public Offerings in the Philippines from 1987 to 1997

1999 ◽  
Vol 02 (03) ◽  
pp. 285-300 ◽  
Author(s):  
Michael J. Sullivan ◽  
Angelo A. Unite
Keyword(s):  
Initial Public Offerings ◽  
The Philippines ◽  
Firm Age ◽  
Ipo Underpricing ◽  
Market Conditions ◽  
Public Offerings ◽  
Regulatory Policies ◽  
Size Firm

In this paper we report returns for initial public offerings (IPOs) in the Philippines and investigate some characteristics found in other countries to affect returns, specifically offer size, firm age, and industry grouping. For a sample of 104 IPOs during the 11-year period 1987 through 1997, we find average initial returns of 22.69 percent. We do not find that offer size, firm age, or industry groupings affect IPO underpricing and conclude from our findings that underwriters who price Philippine IPOs face different regulatory policies, contractual mechanisms, market conditions than those present in other markets.

scholarly journals Prevalence and associated factors of active smoking among individuals living with hypertension and/or diabetes in Africa: a systematic review and meta-analysis protocol

BMJ Open ◽  
2017 ◽  
Vol 7 (10) ◽  
pp. e015444 ◽  
Author(s):  
Guy S Wafeu ◽  
Aurel T Tankeu ◽  
Francky Teddy A Endomba ◽  
Jobert Richie Nansseu ◽  
Arnaud D Kaze ◽  
...  
Keyword(s):  
Systematic Review ◽  
Meta Analysis ◽  
Geographic Region ◽  
Future Research ◽  
P Value ◽  
Published Data ◽  
Final Report ◽  
Active Smoking ◽  
Analysis Model ◽  
Factors Associated

IntroductionTobacco use significantly increases cardiovascular complications in people living with hypertension and/or diabetes. We aim to summarise data on the prevalence and factors associated with active smoking in these conditions in Africa.Method and analysisWe will search PubMed, Embase, Google Scholar and African Journals Online for relevant abstracts of studies on active smoking in individuals living with diabetes and/or hypertension published from 1 January 2000 to 31 December 2016, with no language restriction. Additionally, relevant unpublished papers and conference proceedings will be checked, as well as references of included articles. Two investigators will independently screen, select studies, extract data and assess the risk of bias in each study. Data will be analysed using Stata software (Stata V.14, Texas, USA). The study-specific estimates will be pooled through a random-effects meta-analysis model to obtain an overall summary estimate of the prevalence of smoking across studies. Also, we will assess factors associated to smoking. Heterogeneity of studies will be evaluated by the χ2 test on Cochrane’s Q statistic. Funnel plots analysis and Egger’s test will be done to detect publication bias. Results will be presented by geographic region (central, eastern, northern, southern and western Africa). A p value less than 0.05 will be considered significant for factors associated to smoking.Ethics and disseminationThis study is based on published data, and therefore ethical approval is not a requirement. This systematic review and meta-analysis is expected to serve as a basis for designing cost-effective interventions to reduce and prevent smoking in patients with diabetes and/or hypertension, and as a guide for future research based on the remaining gaps. The final report of this study in the form of a scientific paper will be published in peer-reviewed journals. Findings will further be presented at conferences and submitted to relevant health authorities.

scholarly journals Underpricing of initial public offerings in experimental asset markets

2019 ◽  
Vol 23 (4) ◽  
pp. 1002-1029 ◽  
Author(s):  
Sascha Füllbrunn ◽  
Tibor Neugebauer ◽  
Andreas Nicklisch
Keyword(s):  
Initial Public Offerings ◽  
Market Research ◽  
Equity Market ◽  
Asset Markets ◽  
Open Book ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Experimental Asset Markets ◽  
Offering Price ◽  
Adjustment Dynamics

AbstractThe underpricing of initial public offerings (IPO) is a well-documented fact of empirical equity market research. Theories explain this underpricing with market imperfections. We study three empirically relevant IPO mechanisms under almost perfect market conditions in the laboratory: a stylized book building approach, a closed book auction, and an open book auction. We report underpricing in each of these IPO mechanisms. Uncertainty about the aftermarket behavior may partly explain IPO excess returns but underpricing persists even in the repeated setting where uncertainty is negligible and despite the equilibrium adjustment dynamics, that we observe in the data. The data reveal a market-wide impact of investors’ reluctance to sell in the aftermarket at a price below the offering price. We conclude that a behavioural bias similar to the disposition effect fosters IPO underpricing in our setting.

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