Book Building Process: A Mechanism for Efficient Pricing in India

Bora, Bedanta; Adhikary, Anindita; Jha, Ajeya

doi:10.7763/ijtef.2012.v3.182

Cited by 3 publications

(2 citation statements)

References 8 publications

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“…The finding of this study is consistent with the findings of Narasimhan and Ramana (1995), Madhusoodanan and Thiripalraju (1997), Karmakar (2002), Chaturvedi et al (2006), Sehgal and Singh (2007), and Garg et al (2008). Bora et al (2012) reported that Indian IPOs are underpriced when measured using offer price and the opening price on listing day (which is again consistent with our measure using the same prices). Also, Cheung and Krinsky (1994) and Cheng et al (2004) documented underpricing using similar measure.…”

Section: Discussionsupporting

confidence: 86%

“…Garg, Arora, and Singla (2008) also documented that Indian IPOs are significantly underpriced and noted that the level of underpricing does not vary much in the hot and cold IPO market. Studying book-built and fixed-price IPOs in India, Bora, Adhikary, and Jha (2012) found underpricing of 21.42% for fixed-price IPOs and 18.22% for book-built IPOs. However, when adjusted for market movement, the corresponding figures are 16.71 and 16.75, respectively.…”

Section: Listing Day Underpricingmentioning

confidence: 99%

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Pricing and performance of IPOs: Evidence from Indian stock market

Hawaldar

Kumar

Mallikarjunappa

2018

Cogent Economics & Finance

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This study examines listing day performance of IPOs, book-built and fixed-price IPOs, post-listing aftermarket performance of IPOs, book-built and fixed-price IPOs in the Indian stock market. We examine pricing as well as long run performance of 464 (365 book-built IPOs and 99 fixed-price IPOs) Indian IPOs that went public between 2001 and 2011. The study covers 15 years from the financial year 2001 to 2015. Analysis of the results reveals that compared to fixed-price IPOs, book-built IPOs are underpriced by lesser magnitude. Moreover, book-built IPOs are associated with negative cumulative average abnormal returns (CAARs) up to five years and beyond, the negative CAARs associated with fixed-price IPOs turn positive after one and one-half year and continue to be positive thereafter.

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Section: Discussionsupporting

confidence: 86%

Section: Listing Day Underpricingmentioning

confidence: 99%

Pricing and performance of IPOs: Evidence from Indian stock market

Hawaldar

Kumar

Mallikarjunappa

2018

Cogent Economics & Finance

View full text Add to dashboard Cite

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Windows of opportunity and seasoned equity offerings: An empirical study

Kumar

Hawaldar

Mallikarjunappa

2018

Cogent Economics & Finance

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Taking a sample of seasoned equity offerings (SEOs) by firms listed on Bombay Stock Exchange (BSE) from the year 1992 to 2012, we examine two of the key issues concerning SEOs. First, whether SEOs are underpriced, issued at a price lower than the prevailing market price; and second, whether companies time their issues. Study of 162 SEOs exhibits significant underpricing at 1% significance level leading us to conclude that SEOs in India are significantly underpriced. Analysis of abnormal returns for 114 SEOs taking different event windows surrounding issue opening dates reveals that, except for the −1 to + 1 event window, CAAR for all other event windows are significantly negative. This leads us to conclude that investors in India experience significantly negative abnormal returns surrounding SEO issue opening. Overall, findings of the study reveal that SEOs in India are underpriced and that there exist windows of opportunity for SEOs in India.

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