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The aftermarket pricing performance of initial public offers: insights from India

K. Srinivasa Reddy (Department of Management Studies, Indian Institute of Technology (IIT) Roorkee, Roorkee, India)

International Journal of Commerce and Management

ISSN: 1056-9219

Article publication date: 2 March 2015




The purpose of this paper is to examine the underpricing of initial public offers (IPOs), which were announced by Indian firms for the period 2007 through 2009. It is motivated by the fact that a well-developed capital market is a function of economic growth and a reflection of the financial system. Thus, this study investigates aftermarket pricing performance of IPOs during the recent global financial crisis.


This paper studies the underpricing of 133 IPOs in three groups, namely, house-full collections, short-run and long-run periods. To do so, it uses event study method to observe underpricing, which is examined in various window periods. Further, industry- and year-wise offers are analyzed and interpreted. Accordingly, hypotheses are being developed and tested through a static “analysis of variance”.


The study explores that post-listing IPOs assure positive returns in the short run, but they tend to plunge and become negative in the long run. In particular, highest returns have been observed in the first week of post-listing.

Research limitations/implications

Limitations include, the study does not compute market-adjusted returns to find abnormal performance of stocks, and does not apply regression statistic to examine the factors that affect underpricing.

Practical implications

Eventually, conclusions are drawn from India–international results, and thus it would add some new insights on investor perspectives (e.g. price signalling) to the existing IPOs literature, especially from Asian markets context.


This paper is an original research that examines the underpricing of Indian IPOs during the recent financial crisis, particularly in three groups: house-full collections, short-run and long-run periods.



The author truthfully thanks the Editor-in-Chief (Abbas J. Ali) and four anonymous reviewers for giving fruitful suggestions that significantly improved the manuscript. The author of this article was a Doctoral Student of PhD (in self-finance category) of Finance Research Group (FrG) grateful to his doctoral research supervisors (Vinay Kumar Nangia and Rajat Agrawal) for providing excellent research guidance. The author personally thanks Ganesh Reddy, Prashant Kiran and Jones, Alluri Satyanarayana, Bandi Yogi Reddy, Bandi Harinarapa Reddy, Vadicherla Koti Reddy, M. Suresh Reddy, Kottala Sriyogi, A. Dalpathi, Virendra Balon, Naveen Kumar, Baliwada Kiran, Udala Kistaiah, Vemparala Siva and Malleswara Rao for their ad hoc financial support to execute and to continue his doctoral research at the campus – IIT Roorkee; and also acknowledges Punjab National Bank (IITR branch) for approving a short-term educational loan. This paper is outside the scope of Reddy’s doctoral research. The usual disclaimer applies.


Srinivasa Reddy, K. (2015), "The aftermarket pricing performance of initial public offers: insights from India", International Journal of Commerce and Management, Vol. 25 No. 1, pp. 84-107.



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