A STUDY OF THE FACTORS THAT INFLUENCE THE PRICES OF INITIAL PUBLIC OFFERINGS (IPOS). AN INVESTIGATION IN PAKISTAN STOCK EXCHANGE (PSX)
Keywords:
Initial Public Offering,, IPO pricing,, maintaining ownership before going public (pre retention).Abstract
The study aimed to investigate the factors influencing the pricing of initial public offers (IPOs) by examining the correlation between IPO pricing and several firm-specific characteristics, including pre-IPO ownership retention, firm age, firm size, offer size, and
investor mood. Data from ninety-three businesses listed on the Pakistan Stock Exchange (PSX), which traded stocks between 2012 and 2017, was collected and analyzed to evaluate the impact of these characteristics using descriptive statistics, correlation, and multiple
regression tests. The study's findings indicated a dual influence on IPO price, where offer size and pre-IPO ownership retention negatively impacted it, whilst firm age, firm size, and investor sentiment positively influenced IPO pricing. Investor sentiment is the predominant variable among all others. Subsequently, the model was re-specified via a redundancy process, indicating that the firm's size positively influences IPO pricing, while the offer size negatively affects it. These findings are specifically to the Pakistan stock market, recognized for its volatility as an emerging market. This study seeks to enhance understanding of the aspects commonly emphasized by IPO firms and promoted to investors, assisting them in making educated investment decisions in publicly listed
companies.
