Sumit
Goyal, Inderpal Singh (2014). A Study on the performance of Initial Public
Offering. Apeejay Journal of Management
and Technology, Volume 9. Through this paper, an attempt has been made to
empirically explore the performance and determinants of under-pricing of
Initial Public Offerings (IPOs) in the Indian market. Research attempts to
examine the performance of IPOs listed on NSE. The study presents evidence on
performance of IPOs on the initial day of listing i.e. 1st day of listing of
271 companies listed on NSE. The study reports that 79.33 percent of the IPOs
issued were under-priced on the day of listing. It suggests that the high
initial return may be due to the over expectation of investors. The study also
evaluated the performance of IPOs on the 30th day from the day of listing which
reported only 45.38 percent under-pricing. It concludes that on 30th day the
expectation of the investors gets decreased. The independent variables i.e. age
of the firm, ex-ante, market volatility, leverage ratio, are able to explain
23.8 variability of the under-pricing. The sector analysis of IPOs provided
that information technology, power, steel, real estate are the sector where the
IPOs were under-priced heavily i.e. 90 percent and above companies of these sectors
were under-priced on the initial day of listing. It can be interpreted that
IPOs are risky and thus fail to attract more interest from the investors. To
attract more interest of the investors the companies deliberately under-price
their issue to gain profit from their investors. IPOs might be perceived to be
more risky and uncertain at the time of issue which results in greater under-pricing.
Issuing firms could be able to make a trade-off in the short-term under-pricing
and long-run underperformance.

Dr.
Anuradha Sheokand (2015). A comprehensive study on Under Pricing in Indian
Initial Public Offerings, International
Journal of Informative & Futuristic Research. The above analysis
supports the existence of significant under-pricing in Indian IPOs market and
confirms the results of other Indian studies (Shah 1995), Krishanmurti (1999),
Jaitly (2004) and Singh (2008). It can be concluded that average high raw
returns and MAERs and large IPO volume during the boom period might be
indicative of the investors? optimism resulting from the liberalization
initiated by government and SEBI during the first half of 1990s. It was
documented in the IPOs literature that small and young companies were likely to
go public during the hot period to take advantage of investor’s enthusiasm.
Signally theory claimed that the good firms would get listed during the hot
period and under-priced more to win investor’s confidence. The main objective
was to find out the performance of Indian IPOs for short period, i.e. from the
date of offer to the public to the date of their first day of trading after
listing on stock exchange. Also comparison was made between the boom period
(1992-96) and the slump period (1997-2007) to draw a better conclusion. The
short term performance has been calculated by using the traditional method,
i.e. the difference between the closing price on the first day of trading and
offer price and divided by the offer price.

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Paul
A. Gompers and Josh Lerner (2003). The Really Long-Run Performance of Initial
Public Offering. The Journal Of Finance.
This paper has sought to assess the performance of IPOs by examining the period
before the creation of Nasdaq. The author says that by considering a period
where returns of IPOs have not been systematically examined, we hope to shed
light on whether the poor performance is driven by some fundamental behavioral
anomaly or rather is just an idiosyncratic feature of the recent time period
that has been the focus of prior academic studies. Pre-Nasdaq IPOs represent a
potentially powerful out of-sample test of IPO underperformance. Most papers
that examine IPO performance in other countries, as works such as Rouwenhorst
(1998) highlight, may be finding similar patterns because of common economic
factors or common investor biases across countries at the same time. In a
sample of 3,661 IPOs between 1935 and 1972, we find underperformance when event
time buy and hold abnormal returns are used, but even this result is not
consistently statistically significant. The underperformance disappears when we
use cumulative abnormal returns. A calendar-time analysis shows that IPOs
return at least as much as the market over the entire sample period. Finally,
the intercepts in CAPM and Fama-French three-factor regressions are insignificantly
different from or even greater than zero. In short, the relative performance of
an IPO sample depends on the method of examining performance. One methodology
suggests that this sample underperforms; others suggest superior performance.
Our analysis of pre-Nasdaq IPOs serves to underscore the questions about IPO
performance raised in Brav and Gompers (1997). The weakness of the evidence for
underperformance and the failure to observe a consistent pattern raise doubts
about whether a unique IPO effect indeed exists. Is there a real behavioral
anomaly at work here, or rather is the poor performance of the offerings in the
Nasdaq era simply a historical accident? Fama (1998) suggests that spurious
anomalies can be anticipated when stock returns are examined repeatedly.
Alternatively, systematic underperformance may be present in the data, but this
systematic underperformance would then affect a much larger class of companies.
Future tests of market efficiency need to look beyond individual anomalies and
address broader market movements if they are to shed more light.

Daniel
Dorn (2009). Does Sentiment Drive the Retail Demand for IPOs? Journal of Financial and Quantitative
Analysis. The main focus to infere if sentiment drives the demand for
IPO’s. Based on his findings the author concludes that sentiment drives IPO
purchases made by a sample of clients at a German retail broker. This can be
inferred from the clients’ willingness to trade against institutional investors
in the WI market and pay a substantial WI premium relative to prices in the
immediate aftermarket. The inference that investors act on sentiment is
therefore not based on long-horizon returns as in prior work. Although the
period during which I observe individual-level WI transaction data only spans
August 1 999 to May 2000, the poor performance of retail investors in the WI
market can be confirmed out of sample, using publicly available WI data
provided by a leading WI market maker for the subsequent period from June 2000
to April 2001 . Specifically, I document that retail investors remain willing
to pay the WI premium even after the crash of mid-2000. This suggests that
sentiment investors do not simply disappear during periods of poor returns. The
poor performance of IPOs aggressively bought by retail investors, either in the
WI market or in the aftermarket or both, is consistent with retail sentiment
initially pushing aftermarket prices above fundamental values. In particular,
variation in retail IPO purchases explains variation in aftermarket returns
during my sample period, after controlling for IPO characteristics that have
been previously related to aftermarket returns.

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