A Study of Factors Leading to Underpricing of Initial Public Offerings (IPOs) in India

Synopsis
Of

Major Research Project

(In the partial fulfillment of the requirement for the award of the degree) Master of Business Administration (FT) 2009-2011

GUIDED BY:

SUBMITTED BY:

PROF. PINAL AGARWAL

SWAPNIL MUNSHI MBA- III SEM

GOVINDRAM SEKSARIA INSTITUTE OF MANAGEMENT AND RESEARCH, INDORE

(Affiliated to Devi Ahilya Vishwavidyalaya, Indore)

Objectives
Primary objective:
To find out the various factors leading for the underpricing of IPOs in India.

Secondary objective:
1. To measure the initial under pricing of IPOs in India i.e. from the date of offer to the public to the date of their listing. 2. To analyze the factors influencing price performance of IPOs. 3. To Study significant association between risk associated with IPOs and underpricing. 4. To Study the relationship between issue size and underpricing 5. To measure significant association between reputation of company and Underpricing. 6. To measure relationship between financial strength of company and Underpricing. 7. To analyze the impact of advertisement of IPO in media on underpricing 8. To measure relationship between initial returns and underpricing to measure impact of price limit of issue on underpricing. 9. To analyze relationship between market condition and underpricing. 10. To analyze relationship between past performance of IPO and underpricing

INDEX

S.No.

CONTENTS

PAGE NO.

1. 2. 3. 4. 5. 6.

Introduction

1-2

Literature review

3-4

Rationale

Objectives

Research Methodology

Bibliography

Research Methodology
Research Type:
Exploratory research

Tools for Data collection:

Secondary Data:

Sample Size:
12 Companies.

Tool for Analysis of Data:

T test

BIBLIOGRAPHY
Blum, James D. (1973), An Analysis of the Price Behaviour of Initial Common Stock Offerings, The Journal of Finance, Vol.28, No.1, pp. 215 Chemmuanur ,Thomas J. ,( Mar 1993) , The Pricing of Initial Public Offerings: A dynamic model with Information Production, The Journal of Finance, Vol. 48, No.1, pp 285-304 Chen, Gongmeng. , Firth, Michael. , Kin Jeong-Bon. (2000), The Post Issue Market Performance of Initial Public Offerings in Chinas New Stock Markets, Review of Quantitative Finance and Accounting, Netherlands, Vol. 14, pp.319-339. Gompers, Paul A, Lerner, Josh. (2001), The Really Long-Run Performance of Initial Public Offerings: The Pre-Nasdaq Evidence, working paper, National Bureau of Economic Research, Cambridge. Janakiramanan, S. (2007), Under-Pricing and Long-Run Performance of Initial Public Offerings in Indian Stock Market Research Work NSE India website. Jegadeesh, Narasimham, Weinstein, Mark, Welch, Ivo. (1993) , An Empirical investigation of IPO returns and subsequent equity offerings Journal of Financial Economics, Vol. 34, pp 153-175. Khurshed, Arif. , Pande, Alok. , Singh, AjaiK. (2006), Subscription patterns, offer prices and the underpricing of IPOs: Evidence from India, Working Paper Series, University of Manchester. Krishanmurti, Chanderashekhar. (2002), The Initial Listing Performance of Indian IPOs, Managerial Finance, Vol.28, No.2, pp. 39-51. Ljunquist, Alexander P., Nanda, Vikram. , Singh, Rajdeep. (Sept 2001), Hot Markets, Investor Sentiment and IPO Pricing, Working paper, New York University. Lowry Michelle, Schwert G. William (2000), IPO Market Cycles: Bubbles or Sequential Learning, working paper no. 7935, NBER, Cambridge. Mauer, David C., Senbet, Lemma W. (Mar 1992), The Effect of the Secondary Market on the Pricing of Initial Public Offerings: Theory and Evidence, The Journal of Financial and Quantitative Analysis, Vol.27, No. 1, pp. 55-79. Pande, Alok. Vaidayanathan, R. (2007), Determinants of IPO underpricing in the National Stock Exchange of India Paper presented at the APRIA Conference in Taipei.