Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
Price Band, Offer Price Adjustment and Initial Listing Returns:
Evidence from the Indian IPO Market
Chandrasekhar Krishnamurti* and Dom Pensiero**
Extant research on developed markets shows that investor sentiment plays
a prominent role in IPO markets. There is sparse work in the context of
emerging markets. We fill this lacuna by studying the Indian IPO market.
We examine the determinants of offer price band and its influence on offer
price adjustment and subsequent listing performance. Offer price band is a
crucial component of the book building process and has not been studied in
the context of emerging markets. Our work fills this void. We hypothesise
that retail demand which is a proxy for investor sentiment will positively
influence offer price band. We also posit that the profitability of a firm will be
inversely related to offer price band. Our empirical tests support these
hypotheses. We also find that offer price adjustment is positively related to
offer price band.
JEL Codes: G14 G18 G24
*
Dr Chandrasekhar Krishnamurti, School of Accounting, Economics and Finance, University of Southern
QLD, Australia, Email: Chandrasekhar.Krishnamurti@usq.edu.au
**Dom Pensiero, School of Accounting, Economics and Finance, University of Southern QLD, Australia,
Email: domenico.pensiero@usq.edu.au