The nexus between risk factor disclosures and short-run performance of IPOs – evidence from literature

Abstract

Purpose

The main purpose of the present study is to stretch the theoretical framework of existing stock of literature with reference to Risk Disclosures in IPO Prospectus and IPO performance. The systematic literature review study endows easy and quick access to researchers as well as categorization of the available literature.

Design/methodology/approach

Fifty research papers, which has been published or presented from 2000 to 2019 and are related to IPO risk disclosures and IPO performance, have been finalized. Further, these research papers were categorized based upon the five different variables to identify the probable research gap in the selected topic.

Findings

This review provides a coherent summary of past studies related to topic and develop a comprehensive evidence on relationship between disclosure of risk factors and IPO underpricing in short run. It shows the existing research gap that needs to be fulfilled to expand the research horizon of future research studies.

Research limitations/implications

The sole limitation of the study is that being a systematic literature review study, it does not carry any empirical results.

Practical implications

The investors will be able to identify the key risk factors, disclosed in IPO prospectus, that may have probable dent on the short-term return from IPO. The findings will further help the investors and financial analyst to identify the degree of impact of risk disclosures that are listed in IPO prospectus.

Originality/value

The paper is a first of its kind to stretch the existing literature and develop theoretical framework in the context of risk factor discloses in IPO prospectus and IPO performance with reference to India. The present study is an attempt to integrate the existing gap between empirical research and existing literature and suggest the techniques to the future practitioners to widen the horizon of their research.

Citation

Grover, K.L. and Bhullar, P.S. (2021), "The nexus between risk factor disclosures and short-run performance of IPOs – evidence from literature", World Journal of Entrepreneurship, Management and Sustainable Development, Vol. 17 No. 4, pp. 907-921. https://doi.org/10.1108/WJEMSD-11-2020-0146