Role of fundamentals in evaluation of IPOs: evidence from Indian and US textile sector Online publication date: Wed, 22-Sep-2021
by Diwahar Sunder Nadar; Bharti Wadhwa
International Journal of Public Sector Performance Management (IJPSPM), Vol. 8, No. 1/2, 2021
Abstract: The study was conducted with the objective of verifying whether the success of every initial public offer is on the basis of its fundamental strength or not. Empirically identified sector-specific representative financial ratios were used to represent fundamental strength and listing gain/loss to represent IPO success. Data were collected in the form of 24 financial ratios for 60 Indian and 27 US textile companies across 11 years. Use of inter-correlation matrix and factor analysis, lead to the elimination of redundant ratios and resulted in empirically identified sector-specific representative financial ratios. In order to check for the impact of fundamental strength on IPO success, logistic regression was run. The results of the regression were able to confirm the existence of fundamental strength in initial public offer success for both the economies. The study confirmed the impact of fundamental strength was restrained and approximately the same in both the economies.
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