Title: A study into determinants of underpricing of initial public offerings in India during 2015-2020

Authors: Prasenjit Roy; Arindam Gupta

Addresses: Department of Business Administration, Vidyasagar University, Midnapore 721102, West Bengal, India ' Department of Commerce, Vidyasagar University, Midnapore 721102, West Bengal, India

Abstract: The study examines IPO-underpricing of the book-built IPOs getting listed at the Bombay Stock Exchange (BSE) over the period 2015-2020. The sample comprises a wide range of industry sectors with 19 from BFSI, 12 from electronics and information technology followed by various other sectors. The findings indicate that the degree of IPO-underpricing is on a downward trend compared to the previous studies. The average IPO-underpricing is found to be 11.195% during the study period. Multiple regression results bring about oversubscription ratio, offer size, general market conditions and underwriter prestige as significant determinants. The results of the study postulate that the decline in the degree of underpricing has the likelihood to extend greater opportunity cost to the investors and repose confidence in the Indian primary market. The implication of the study entails market regulators introducing norms that intend to protect investors in IPO over a longer time horizon.

Keywords: underpricing; initial public offerings; IPOs; primary market; IPO-underpricing; IPO; oversubscription; overreaction; investor; return; India.

DOI: 10.1504/IJEA.2022.126284

International Journal of Economics and Accounting, 2022 Vol.11 No.3, pp.271 - 292

Received: 18 Sep 2021
Accepted: 12 Jun 2022
Published online: 18 Oct 2022 *

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