Pricing and performance of IPOs: Evidence from Indian stock market

Hawaldar, Iqbal Thonse; Kumar, Krishna R.; Mallikarjunappa, T.

doi:10.1080/23322039.2017.1420350

Cited by 14 publications

(26 citation statements)

References 56 publications

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“…Also, many initiatives have been undertaken in the primary sector during the study period which might have resulted in the best performance of the primary sector (Verma, 2018). Further, the IPO underpricing is in line with most of the studies revealing a listing gain on the first day of trading (Bhanumurthy et al, 2016; Hawaldar et al, 2018; Jain & Kini, 1994; Krigman et al, 1999; Loughran & Ritter, 2004; Sehgal & Singh, 2008). Almost 68 per cent of the selected sample were underpriced on the first day of listing.…”

Section: Discussionsupporting

confidence: 79%

“…In other words, IPOs underperform the market indices in the short run. This result is supported by a study that states that the short-run performance of IPOs for 3-month turns significantly negative (Hawaldar et al, 2018).…”

Section: Analysis and Interpretationmentioning

confidence: 64%

“…Positive short-run performance has been reported by many studies (Dzimiri & Radikoko, 2015; Einar, 2015). On the contrary, Hawaldar et al (2018) have analysed the underperformance of IPOs over the 3 months post listing.…”

Section: Review Of Literaturementioning

confidence: 99%

“…Firms backed with venture capitalists and prestigious underwriters perform relatively better in the long run (Carter et al, 1998; Krishnan et al, 2011). The long-run performance of the IPOs is sensitive to the benchmarks used while computing the adjusted returns (Hawaldar et al, 2018; Ritter, 1991). On the other hand, Dutta (2017) finds that the underperformance of seasoned equity offerings (SEOs) is sensitive to the methodology used.…”

Section: Review Of Literaturementioning

confidence: 99%

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Foreign Direct Investment and Initial Public Offerings: Exploring the Roads Less Travelled

Singh

Jain

2020

FIIB Business Review

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This article examines the performance of initial public offerings (IPOs) issued by the economic sectors in India. It analyses the level of underpricing measured by market adjusted initial return (MAIR), short-run performance measured by market-adjusted abnormal return (MAAR) and long-run performance measured by 3-year buy and hold abnormal return (BHAR) methodology relative to Sensex and Nifty for 40 IPOs approaching the capital market during the period 2006–2016. The selection of IPOs is based on the foreign direct investment (FDI) limit of USD 3,000 million in each economic sector, that is, primary sector, secondary sector and tertiary sector. The long-run analysis is done at the end of the first year, the second year and the third year. It is found using the ordinary least square (OLS) regression that variables like age of the issuing firm and volume traded on the first day of listing have a positive relation with initial returns, while offer size of the IPO has a negative relation with the initial return. Further, this study also finds out that the secondary sector performs poorly in the long run relative to the primary and tertiary sectors. This study can be of importance to investors for assessing different sectors before investing.

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Section: Discussionsupporting

confidence: 79%

Section: Analysis and Interpretationmentioning

confidence: 64%

Section: Review Of Literaturementioning

confidence: 99%

Section: Review Of Literaturementioning

confidence: 99%

See 2 more Smart Citations

Foreign Direct Investment and Initial Public Offerings: Exploring the Roads Less Travelled

Singh

Jain

2020

FIIB Business Review

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“…Using buy and hold abnormal return (BHAR) measure, Sehgal and Singh (2007) find that long-run returns for IPOs in India have been negative between 18 and 40 months of holding; while CAAR measure exhibited the presence of underperformance in the second and third years. More recently, using samples of 365 book-built and 99 fixed-price IPOs, Hawaldar, Kumar, and Mallikarjunappa (2018) find that though IPOs in India that went public between 2001 and 2015 are underpriced, book-built IPOs are underpriced by lesser magnitude when compared to fixed-price IPOs. About long-run performance, study finds that book-built IPOs are associated with negative CAARs up to five years and beyond; while fixed-price IPOs turn positive after one and a half year and continues to be positive thereafter.…”

Section: Review Of Literature and Hypothesesmentioning

confidence: 99%

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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