Divya Jindal, Apeejay School of Management, New Delhi, India
Ravi Singla, University School of Applied Management, Punjabi University Patiala, India

It has been observed throughout the world, including India, that IPOs are underpriced as they get listed at a price which is higher than the listing price. A number of studies have found that stock market crashes or significant economic downturns and the resulting declines in stock markets affect the IPO market and the pricing performance of IPOs. Stock market crashes may cause a short term change or a long-term change in the stock market which would in turn affect the underpricing of IPOs. In 2008 the Indian stock market crashed.  The market fell by almost 60 percent in less than a year which was the highest fall experienced by the Indian stock market in recent history. The present paper attempts to determine the effect of this crash on the pricing performance of Indian IPOs by comparing the underpricing of IPOs issued during the three years period prior and three years period post the stock market crash of 2008. The comparison of the underpricing in the pre and post-crash period reveals that the IPOs issued after the crash were underpriced to a lesser extent in comparison to the IPOs issued before the crash. This is evidenced by the significantly lower initial returns of the IPOs issued after the stock market crash of 2008.

Keywords: IPOs, Underpricing, stock market crash, initial returns   

Suggested citation: Jindal, D. & Singla, R. (2017). Under-pricing of Indian IPOs: a study pre and  post stock market crash -2008. Skyline Business Journal, Volume 13, Issue 1, pp 23-32.

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Jindal, D. & Singla, R. (2017). Under-pricing of Indian IPOs: a study pre and  post stock market crash -2008. Skyline Business Journal, Volume 13, Issue 1, pp 23-32.