Relationship of IPO Issue Price and Listing Day Returns with IPO Pricing Parameters

Shenoy, Smitha V.; Srinivasan, K.

doi:10.18843/ijms/v5i4(1)/02

Cited by 6 publications

(11 citation statements)

References 9 publications

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“…This is in line with research [7] which states that Net Assets Value has a significantly positive effect on the Offer Price. This is different from research conducted [4] which states that Net Asset Value has a negative and significant effect on the IPO Offer Price.…”

Section: Literature Review 21 Theoretical Framework 211 Net Asset Valuecontrasting

confidence: 95%

“…In the previous research by [3] and [7], regarding Pre-IPO Financial Performance and Offer Price Estimation, which conducted its research in India, it provides empirical evidence that Net Assets Value has a significantly positive effect on the Offer Price. This is different from research conducted [4] which states that Net Asset Value has a negative and significant effect on the IPO Offer Price. Based on this, the hypothesis is formulated as follows:…”

Section: Development Of Hypothesis 231 Effect Of Net Assets Value On ...contrasting

confidence: 95%

“…According to research conducted by [3], his research stated that Return on Net Worth had a positive effect on the IPO Offer Price. this is in line with research conducted by [4] which states that Return on Net Worth has a positive and significant effect on IPO stock pricing. This is different from research conducted by [12] which states that Return on Equity has a negative and significant effect…”

Section: Return On Equitysupporting

confidence: 92%

“…Price earnings ratio from the results of research [19] shows a negative and significant influence on the Initial Public Offering (IPO). Return on equity from the results of research [4] shows a positive and significant influence on the Initial Public Offering (IPO). Share offered and Age of The Firm from the results of research [22] and [25] show a positive and significant influence on the Initial Public Offering (IPO).…”

Section: Conceptual Frameworkmentioning

confidence: 99%

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Financial Performance Factors Influencing Initial Public Offering (IPO) of Companies in Indonesia

Ramadhan,

Ediano,

Leon

2023

grrbe

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This study aimed to obtain empirical evidence regarding the effect of net asset value, return on assets, return on equity, earnings per share, net income, and price earnings ratio of the IPO offering. Initial Public Offering (IPO) is another option for companies to get funding. With an IPO, the company's business form changes to go public. Companies going public require large funds to fund the company. The independent variables in this study are net asset value, return on assets, return on equity, earnings per share, profit after tax, and price earnings ratio. While the dependent variable is the IPO offering price. This research was conducted by collecting data from 86 companies that conducted an IPO on the Indonesia Stock Exchange within a period of 2 years (2021)(2022). The results of this study explained that net asset value has a positive effect on the IPO offer price. Return on assets has a negative effect on the IPO offer price. Earnings per share has a positive effect on the IPO offer price. Profit after tax has no effect on the IPO offer price. Price earnings ratio has a positive effect on the IPO offer price. Return on equity has a positive effect on the IPO offer price. The control variables (offer price and age of the firm) have no effect on the IPO offer price. The implication of this research is to provide financial managers with information regarding financial performance that can affect the offering price of shares at the time of the IPO which aims to reduce speculative failures and can create shareholder wealth. For investors, investors should choose companies that have high earnings per share and high return on assets.

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Section: Literature Review 21 Theoretical Framework 211 Net Asset Valuecontrasting

confidence: 95%

Section: Development Of Hypothesis 231 Effect Of Net Assets Value On ...contrasting

confidence: 95%

Section: Return On Equitysupporting

confidence: 92%

Section: Conceptual Frameworkmentioning

confidence: 99%

See 2 more Smart Citations

Financial Performance Factors Influencing Initial Public Offering (IPO) of Companies in Indonesia

Ramadhan,

Ediano,

Leon

2023

grrbe

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“…There are several approaches for determining the intrinsic value of an IPO stock. Investors in IPOs consider the offering price as a benchmark for determining the inherent value of a stock (Shenoy and Kannan 2018). Investors also examine a firm's financials before investing in an IPO.…”

Section: Introductionmentioning

confidence: 99%

Pre-IPO Financial Performance and Offer Price Estimation: Evidence from India

Yadav

Prosad

Singh

2023

JRFM

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The primary focus of this paper is to develop an empirical model to study the relationship between key Financial Performance Indicators and IPO Offer Prices. It seeks to assist Indian IPO investors to make more informed decisions by advancing their knowledge about relevant Pre-IPO Financial Performance Indicators that are effective predictors of Offer Price. The purpose is this study is to provide all the stakeholders with an approach to evaluate the Offer Price of IPOs. This will help the stakeholders to overcome pricing anomalies. The companies listed in the National Stock Exchange of India between the financial years 2015–2016 to 2020–2021 are taken as the sample of the study. The secondary data are analyzed by constructing a multiple linear regression model. This study uses a range of fundamental factors related to financial performance in a single framework to demonstrate that an IPO Offer Price can be assessed by its Pre-IPO Financial Performance. The findings of this study validate the objectives of the model constructed. This research shows that the Pre-IPO Financial Performance has an influential role in explaining the IPO offering price. The results of the study show that variables such as Net Asset Value (NAV), Return on Assets (ROA), Profit after Tax (PAT), and Return on Net Worth (RONW) have a substantial impact on IPO Offering Price. The findings of the research will assist IPO issuers in pricing their offerings better and more competitively. Furthermore, this study will also minimize the gap between offering and listing prices to prevent speculative failure. The study will help investors with minimal resources to evaluate the value of any IPO issue. An IPO’s value can be fairly estimated, and investors can decide whether the issue is worth investing in or not.

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Determinants of Book Built IPO underpricing – differential issue size and market momentum approach revisited

Suresha B,

Nayak,

Krishna T A

et al. 2023

Cogent Economics & Finance

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Relationship of IPO Issue Price and Listing Day Returns with IPO Pricing Parameters

Cited by 6 publications

References 9 publications

Financial Performance Factors Influencing Initial Public Offering (IPO) of Companies in Indonesia

Financial Performance Factors Influencing Initial Public Offering (IPO) of Companies in Indonesia

Pre-IPO Financial Performance and Offer Price Estimation: Evidence from India

Determinants of Book Built IPO underpricing – differential issue size and market momentum approach revisited

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