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Initial Public Offerings and Performance Evaluation: Evidence from the Indian Capital Market

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  • Appala Raju Middi

    (Department of Management, Christ University, India)

Abstract

This paper attempts to prove the existence of under-pricing of Indian Initial Public Offerings (IPOs). We examine the aftermarket performance for up to 12 months using a sample size of 25 IPOs issued in 2015. The sample reveals a 3% Raw Initial Returns on the first trading day close. Aftermarket performance is measured in terms of Market Adjusted Initial Returns for 30 days, 3 months and 12 months show an average of 6%, 17% and 26% respectively suggesting an over-performance of IPOs. Finally, using parameters employed in previous literature: firm age, market, proceeds, risk, and size, we conduct a regression analysis showing no factor affecting the under-pricing level.

Suggested Citation

  • Appala Raju Middi, 2018. "Initial Public Offerings and Performance Evaluation: Evidence from the Indian Capital Market," International Journal of Economics and Financial Issues, Econjournals, vol. 8(5), pages 59-63.
    • Handle: RePEc:eco:journ1:2018-05-9
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    References listed on IDEAS

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    1. Alexander Ljungqvist & Vikram Nanda & Rajdeep Singh, 2006. "Hot Markets, Investor Sentiment, and IPO Pricing," The Journal of Business, University of Chicago Press, vol. 79(4), pages 1667-1702, July.
    2. Alberto Dell’Acqua & Leonardo L. Etro & Emanuele Teti & Michele Murri, 2015. "IPO underpricing and aftermarket performance in Italy," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 3(3), pages 1-14, June.
    3. Kiymaz, Halil, 2000. "The initial and aftermarket performance of IPOs in an emerging market: evidence from Istanbul stock exchange," Journal of Multinational Financial Management, Elsevier, vol. 10(2), pages 213-227, June.
    4. Ritter, Jay R, 1991. "The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(1), pages 3-27, March.
    5. Andrew C. Worthington & Jirapun Chorruk, 2009. "The Pricing and Performance of IPOs for Small-and-medium-sized Enterprises: Emerging Market Evidence," Discussion Papers in Finance finance:200912, Griffith University, Department of Accounting, Finance and Economics.
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    More about this item

    Keywords

    Initial Public Offerings; Raw Initial Returns; Market Adjusted Initial Returns; Aftermarket;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G2 - Financial Economics - - Financial Institutions and Services

    Statistics

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