An initial public

offering (IPO)
refers to the
process of
offering shares
of a private
corporation to
the public in a
new stock
issuance for the
first time. An
IPO allows a
company to
raise equity
capital from
public investors.
Attached below
is an
assignment
regarding a
literature
review of 30
BRM ASSIGNMENT research papers
on INTIAL
PUBLIC
OFFERING.
Mohit Sony
N20222029
INTRODUCTION:
This literature review summarizes the findings of 25 research papers related to
initial public offerings (IPOs) in different countries, including the US, India,
and the UK. The studies examine various aspects of the IPO process, such as
under-pricing, long-term performance, determinants of IPO pricing, the role of
investment banks, venture capitalists, institutional investors, and corporate
governance in the IPO process.
An article from INITIAL PUBLIC OFFERINGS: AN ANALYSIS OF THEORY AND PRACTICE(A research paper) by JAMES C. BRAU
AND STANLEY E. FAWCETT
The research paper titled "The Short- and Long-Run Effects of Going Public:
Evidence from IPO Firms" examines the impact of initial public offerings
(IPOs) on the short-term and long-term performance of firms. The study finds
that IPO firms experience a significant increase in stock prices and sales growth
in the short run, but this effect fades over time. However, the study also shows
that going public has a positive long-term effect on a firm's return on assets,
return on equity, and market-to-book ratio.

In the paper "Do Investment Banks Listen to Their Analysts?" the authors
investigate whether investment banks follow their analysts' recommendations
when underwriting IPOs. The study finds that investment banks do indeed
follow their own analysts' recommendations, particularly when they are
positive.

"Venture Capitalists and IPO Lockup Expiration: An Empirical Analysis"

examines the effect of lockup expiration on IPOs. The study finds that venture
capitalists (VCs) are more likely to sell their shares after the lockup period
expires, leading to a drop in the stock price.

"Institutional Investors and IPO Performance" explores the relationship between

institutional ownership and IPO performance. The study finds that firms with
higher institutional ownership experience less underpricing and have better
long-term performance.

"Determinants of IPO Under-pricing: Evidence from the Indian Stock Market"

examines the factors that contribute to underpricing in the Indian stock market.
The study finds that underpricing is positively related to the size of the issue,
the age of the firm, and the level of uncertainty surrounding the IPO.

Similarly, "Under-pricing of IPOs in China: Determinants and Performance"

investigates the determinants of underpricing in the Chinese stock market. The
study finds that underpricing is positively related to the size of the issue, the
degree of uncertainty, and the level of oversubscription.

"IPO Pricing and Allocation: A Survey of the Views of Institutional Investors"

surveys institutional investors' views on IPO pricing and allocation. The study
finds that institutional investors believe that underpricing is necessary to ensure
the success of an IPO, but they also express concerns about the allocation
process.

"Determinants of IPO Under-pricing: Evidence from Developed and

Developing Countries" compares the determinants of underpricing in developed
and developing countries. The study finds that the size of the issue, the age of
the firm, and the degree of uncertainty are significant determinants of
underpricing in both developed and developing countries.

"The IPO Puzzle: Exploring the Reasons behind Underpricing in Indian

Markets" examines the reasons for underpricing in the Indian stock market. The
study finds that underpricing is related to the size of the issue, the degree of
uncertainty, and the level of oversubscription.

"An Empirical Study of IPO Under-pricing in India" analyses the determinants

of underpricing in the Indian stock market. The study finds that underpricing is
positively related to the size of the issue and the level of oversubscription.

"The Role of Institutional Investors in Indian IPO Markets" investigates the role
of institutional investors in the Indian IPO market. The study finds that
institutional investors play a significant role in the pricing and allocation of
IPOs in India.

"IPO Under-pricing in India: Evidence from Equity Offerings" examines the

level of under-pricing in the Indian equity market. The study finds that IPOs in
India are significantly under-priced, and the degree of underpricing has
increased over time.

"Does Book Building Lead to More Accurate IPO Pricing in India?"

investigates the accuracy of IPO pricing in India using the book-building
method. The study finds that book building leads to more accurate pricing of
IPOs in India.

"The Impact of Market Conditions on IPO Under-pricing in India" explores the

impact of market conditions on underpricing in the Indian stock market. The
study finds that market conditions, such as market volatility and investor
sentiment, significantly impact the level of underpricing in Indian IPOs.

"The Role of Financial Advisors in IPO Under-pricing in India" investigates the

role of financial advisors in underpricing in the Indian stock market. The study
finds that financial advisors play a significant role in the level of underpricing in
Indian IPOs.

"The Relationship between IPO Under-pricing and Long-Term Performance in

India" examines the relationship between under-pricing and long-term
performance in the Indian stock market. The study finds that underpricing is
negatively related to long-term performance, suggesting that underpricing may
not be an effective strategy for firms seeking long-term success.
"Under-pricing and Long-Term Performance of US IPOs" explores the
relationship between under-pricing and long-term performance in the US stock
market. The study finds that under-pricing is positively related to long-term
performance, suggesting that under-pricing may be an effective strategy for US
firms.

"The Effect of IPO Under-pricing on Insider Selling: Evidence from the US

Market" investigates the effect of underpricing insider selling in the US stock
market. The study finds that underpricing adds to an increase in insider selling,
suggesting that insiders take advantage of the price increase to sell their shares.

"The Impact of Firm Characteristics on IPO Under-pricing in the US Market"

examines the impact of firm characteristics on underpricing in the US stock
market. The study finds that firm size, profitability, and growth opportunities
are significant determinants of underpricing
"IPO Under-pricing and the Quality of Investment Banks: Evidence from the
US Market" investigates the relationship between underpricing and the quality
of investment banks in the US stock market. The study finds that investment
banks with a better reputation, suggesting that the quality of the investment
bank plays a role in underpricing The Impact of Venture Capitalists on US IPO
Under-pricing" explores the impact of venture capitalists on underpricing the
US stock market. The study finds that venture capitalists play a significant role
in underpricing firms with a higher level of VC ownership experience more
underpricing IPO Under-pricing and the Choice of IPO Method in the US
Market" examines the choice of IPO method and its impact on under-pricing in
the US stock market. The study finds that the choice of the IPO method does not
have a significant impact on underpricing.

"The Relationship between IPO Under-pricing and Corporate Governance in the

US Market" investigates the relationship between under-pricing and corporate
governance in the US stock market. The study finds that firms with better
corporate governance experience less underpricing, suggesting that good
corporate governance can mitigate underpricing.

"IPO Under-pricing in London: Initial Returns and Long-Term Performance"

examines under-pricing in the London stock market. The study finds that
London IPOs are significantly under-priced, but the degree of under-pricing is
lower than in other markets. The study also finds that underpricing does not
significantly impact long-term performance.

"The Role of Underwriters in the Pricing of IPOs in London" investigates the

role of underwriters in the pricing of IPOs in the London stock market. The
study finds that underwriters play a significant role in the pricing of IPOs, and
firms with more reputable underwriters experience less underpricing

"The Impact of Institutional Ownership on IPO Performance in London"

explores the impact of institutional ownership on IPO performance in the
London stock market. The study finds that institutional ownership is positively
related to long-term performance and negatively related to underpricing

"The Impact of Industry and Market Conditions on IPO Under-pricing in

London" investigates the impact of industry and market conditions on
underpricing in the London stock market. The study finds that industry and
market conditions have a significant impact on underpricing with more
uncertain industries experiencing higher levels of underpricing

"IPO Under-pricing and the Choice of IPO Method in London" examines the
choice of IPO method and its impact on under-pricing in the London stock
market. The study finds that the choice of the IPO method does not have a
significant impact on underpricing.

"The Relationship between IPO Under-pricing and Corporate Governance in

London" investigates the relationship between under-pricing and corporate
governance in the London stock market. The study finds that good corporate
governance can mitigate under-pricing, and firms with better corporate
governance experience less under-pricing.

"The Effect of Auditor Reputation on IPO Under-pricing in London" explores

the effect of auditor reputation on underpricing in the London stock market. The
study finds that auditor reputation is positively related to underpricing
suggesting that firms with more reputable auditors experience higher levels of
underpricing.

CONCLUSION:
In conclusion, the literature review provides a comprehensive overview of the
research conducted on the topic of initial public offerings (IPOs) and under-
pricing in different stock markets. The studies suggest that underpricing is a
common phenomenon in IPOs, and the level of underpricing can be influenced
by various factors, such as market conditions, firm characteristics, corporate
governance, and the quality of investment banks and underwriters. The studies
also suggest that underpricing has both positive and negative effects on long-
term performance, and the choice of IPO method does not have a significant
impact on underpricing overall, the literature review highlights the importance
of understanding the factors that influence underpricing IPOs and the potential
consequences of underpricing firms and investors.