An Investigation of IPOs Initial Performance in Indonesian Market

The purpose of this study is to investigate the initial public offering in Indonesia as one of the largest emerging markets in Asia. The focus of this study is IPOs’ behaviour, which is determined by underpricing and overpricing. The data consist of companies that launched IPOs on the Indonesian Stock Exchange (IDX) from January 2015 to June 2019. The methodology used in this study is an ordinary least square regression with a cross-sectional analysis. The result shows that IPO’s behaviour tends to be underpriced. However, overpricing might occur in several cases. A broad theoretical framework was used to initialize all the predictors of IPO, and we found that the firm age, gap of day, risk, hot periods, corporate social responsibility (CSR) and privatization showed a significant influence, while other variables, that is, IPO size, investor sentiment, rank lead underwriters, market volatility and board lists did not show significant results. This article adds to existing literature by providing a sample from 2015 until the second quarter of 2019 in Indonesia during a time of hot periods with market uncertainty and US–China trade war. This article adds to the signalling theory related to IPO by analysing the impact of CSR on IPO performance.