Pricing and performance evaluation of initial public offerings (IPO's): Evidence from Indian stock markets

Abstract

Initial Public Offerings (IPOs) is one of the main strategy of going public adopted by firms across the globe, hence marks as an important pivotal moment in the life of a concern, the study seeks to investigate two interdependent phenomenon, i.e. pricing and performance of IPOs from Indian capital markets, the study is based upon a sample of 290 IPO stocks that entered the markets during 2007 up to 2017. The analysis is based on custom techniques like wealth relative index and MAERs. The empirical results of the study conclude that an aggregate of 17.90 percentage level of underpricing is evident amongst IPO issues, furthermore the study highlights a favorable 9 month trend in the performance of IPOs, post which the performance degrades severely. The study also throws lights over several aspects for consideration while cherry-picking to invest in IPO issues to investors in near future.