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What Determines the Success of an IPO? Analysis of IPO Underpricing on the Warsaw Stock Exchange

Author

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  • Małachowski Paweł

    (Faculty of Economic Sciences, University of Warsaw, Warszawa, Poland)

  • Gadowska-dos Santos Dominika

    (Faculty of Economic Sciences, University of Warsaw, Warszawa, Poland)

Abstract

This article aimed to analyse the factors that influence the level of underpricing of an initial public offering (IPO) on the Warsaw Stock Exchange (WSE), based on the example of 101 companies debuting on the main market between 2010 and 2019. We discuss the theories that explain IPO underpricing and the research conducted so far on the Polish market. In the main part of the article, we present the results of our study aimed at identifying and characterising the hitherto-unrecognised factors determining IPO underpricing, which is a contribution to the current research on WSE trends. Our findings point to three variables that influence the level of underpricing: the involvement of private equity or venture capital funds in the transaction, the rate of return of the WSE Index in the 6 months before the IPO, and the amount of capital offered during the debut.

Suggested Citation

  • Małachowski Paweł & Gadowska-dos Santos Dominika, 2021. "What Determines the Success of an IPO? Analysis of IPO Underpricing on the Warsaw Stock Exchange," Central European Economic Journal, Sciendo, vol. 8(55), pages 1-14, January.
    • Handle: RePEc:vrs:ceuecj:v:8:y:2021:i:55:p:1-14:n:1
    DOI: 10.2478/ceej-2021-0001
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    References listed on IDEAS

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    More about this item

    Keywords

    IPO underpricing; stock exchange debut; initial rate of return;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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