Published Online:June 2025
Product Name:The IUP Journal of Financial Risk Management
Product Type:Article
Product Code:IJFRM020625
DOI:10.71329/IUPJFRM/2025.22.2.27-44
Author Name:V Swathi
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:27-44
The paper analyzes the performance of initial public offerings (IPO), since being listed, particularly examining the abnormal returns associated with these financial events. It specifically examines the market performance of book-built IPOs on their listing day, providing insights into how these offerings are received by the market immediately after they are publicly traded. The paper seeks to examine the market efficiency of book-built SME-IPOs during the study period 2015-16 to 2021- 22. Event study methodology is used to inspect the market efficiency of SME-IPOs. The study finds that 92.3% of the IPOs are underpriced. First trading day high initial returns eventually evolve into lower returns in the short run. The study highlights that companies with positive abnormal returns tend to increase in value, while those with negative returns see a decrease. This indicates a considerable bond between listing day returns and sustained accomplishment. Finally, the short-run performance proves to be good, but in the long run, the IPOs significantly underachieve, and therefore investors are advised to consider short-term investment in IPOs.
When a company becomes publicly traded through an initial public offering (IPO), its valuation is announced to the market, and investors also assess the company’s worth. A small business or a large firm might carry this out to launch a new initiative, expand an already existing business, or create awareness among the public.