IPO Characteristics and Financial Outcomes: Empirical Evidence from Indian IPOs
https://doi.org/10.26794/2587-5671-2026-30-2-241-252
Abstract
This study examines the effects of firm-specific factors on the short-run and long-run returns of Indian initial public offerings (IPOs). This research adopts the robust least-squares method to investigate the relationship between shortand long-term returns of IPOs and firm characteristics. This study examines hand-collected data for 328 IPOs over a period of 10 years to identify factors that influence the long-term and short-term performance of IPOs. The findings confirm that the issue price, age, and size have a significant and positive influence on the short-term performance of IPOs. Furthermore, the timing of IPOs has a negative impact on short-term performance. We also find evidence that short-term, market-adjusted excess returns have a positive effect on long-term returns. The findings of this study help to build an understanding of firm-specific factors that may be used to forecast IPO performance in the Indian context.
Supporting agencies: We gratefully acknowledge the infrastructural and financial support provided by the FORE School of Management, New Delhi, XIM University, Bhubaneswar 752050, Odisha, India and the Indian Institute of Management Sirmaur for completing this study. Artificial intelligence (AI) tools, specifically ChatGPT (GPT‑5, OpenAI), were used to support the preparation of this manuscript. The tool was assisted by language refinement and improved text clarity. The authors developed all the conceptual ideas, analyses, and interpretations. The authors reviewed and verified all the AI-generated content to ensure its accuracy, originality, and alignment with academic integrit y and ethical standards.
About the Authors
T. K. Soni
FORE School of Management
India
Competing Interests:
India
Tarun K. Soni — FPM (Finance), Associate Prof.
New Delhi
Competing Interests:
The authors have no conflicts of interest to declare.
A. Singh
Indian Institute of Management Sirmaur
India
Competing Interests:
India
Amrinder Singh — PhD, Assist. Prof. (Accounting & Finance)
Paonta Sahib
Competing Interests:
The authors have no conflicts of interest to declare.
D. P. Satapathy
School of Commerce, XIM University
India
Competing Interests:
India
Debi Prasad Satapathy — Assist. Prof. of Commerce
Odisha
Competing Interests:
The authors have no conflicts of interest to declare.
References
1. Armstrong C., Foster G., Taylor D. Abnormal accruals in newly public companies: Opportunistic misreporting or economic activity? Management Science. 2016;62(5):1316-1338. DOI: 10.1287/mnsc.2015.2179
2. Purayil P. V., Lukose P. J. Ownership dilution and earnings management: Evidence from Indian IPOs. Managerial Finance. 2020;46(3):344-359. DOI: 10.1108/MF-02-2019-0068
3. Trabelsi S., Chalwati A. Poison pills adoption, real earnings management and IPO failure. China Accounting and Finance Review. 2023;25(4):513-539. DOI: 10.1108/CAFR-04-2023-0041
4. Dong Y., Huang J. Price limits, investor sentiment and IPO underpricing: A quasi-natural experiment based on ChiNext. Emerging Markets Review. 2022;51B:100893. DOI: 10.1016/j.ememar.2022.100893
5. Mazumder S., Saha P. COVID‑19: Fear of pandemic and short-term IPO performance. Finance Research Letters. 2021;43:101977. DOI: 10.1016/j.frl.2021.101977
6. Carter R., Manaster S. Initial public offerings and underwriter reputation. The Journal of Finance. 1990;45(4):1045-1067. DOI: 10.2307/2328714
7. Agarwal S., Vyas V. Corporate governance and its impact on long-term performance of Indian IPOs: An empirical investigation. International Journal of Business Excellence. 2022;27(4):571-593. DOI: 10.1504/IJBEX.2022.125108
8. Ahmad-Zaluki N. A., Badru B. O. Intended use of IPO proceeds and initial returns. Journal of Financial Reporting and Accounting. 2021;19(2):184-210. DOI: 10.1108/JFRA-12-2019-0172
9. Ritter J. R., Welch I. A review of IPO activity, pricing and allocations. The Journal of Finance. 2002;57(4):1795- 1828. DOI: 10.1111/1540-6261.00478
10. Handa R., Singh B. Performance of Indian IPOs: An empirical analysis. Global Business Review. 2017;18(3):734- 749. DOI: 10.1177/0972150917692193
11. Ljungqvist A. IPO underpricing. In: Eckbo B. E., ed. Handbook of empirical corporate finance. Amsterdam: Elsevier; 2007:375-422. DOI: 10.1016/B978-0-444-53265-7.50021-4
12. Engelen P.-J., Van Essen M. Underpricing of IPOs: Firm-, issue- and country-specific characteristics. Journal of Banking & Finance. 2010;34(8):1958-1969. DOI: 10.1016/j.jbankfin.2010.01.002
13. Bansal R., Khanna A. Determinants of IPOs initial return: Extreme analysis of Indian market. Journal of Financial Risk Management. 2012;1(4):68-74. DOI: 10.4236/jfrm.2012.14012
14. Neneh B. N., Van Aardt Smit A. Underpricing of IPOs during hot and cold market periods on the South African Stock Exchange. International Journal of Economics and Management Engineering. 2013;7(7):112-119.
15. Butler A. W., O’Keefe M.C., Kieschnick R. Robust determinants of IPO underpricing and their implications for IPO research. Journal of Corporate Finance. 2014;27:367-383. DOI: 10.1016/j.jcorpfin.2014.06.002
16. Chhabra S., Kiran R. Impact of information on winners’ curse and long run performance of initial public offerings. International Journal of Finance & Economics. 2022;27(1):975-992. DOI: 10.1002/ijfe.2186
17. Ichev R. IPO underpricing from the institutional investor perspective: Evidence from emerging markets. Economic Research — Ekonomska Istraživanja. 2023;36(1):2179506. DOI: 10.1080/1331677X.2023.2179506
18. Sakata S., White H. High breakdown point conditional dispersion estimation with application to S&P 500 daily returns volatility. Econometrica. 1998;66(3):529-567. DOI: 10.2307/2998574
19. Leland H. E., Pyle D. H. Informational asymmetries, financial structure and financial intermediation. The Journal of Finance. 1977;32(2):371-387. DOI: 10.2307/2326770
20. Merikas A., Gounopoulos D., Nounis C. Global shipping IPOs performance. Maritime Policy & Management. 2009;36(6):481-505. DOI: 10.1080/03088830903346053
21. Aggarwal P. Global value chains after COVID‑19: A thematic discussion and resilience-based framework. Abhigyan. 2023;41(1):50-62. DOI: 10.56401/Abhigyan_41.1.2023.50-62
22. Field L. C., Lowry M. Institutional versus individual investment in IPOs: The importance of firm fundamentals. Journal of Financial and Quantitative Analysis. 2009;44(3):489-516. DOI: 10.1017/S0022109009990032
23. Chatterjee M., Bhattacharjee T., Chakraborty B. Studies on Indian IPO: Systematic review and future research agenda. Qualitative Research in Financial Markets. 2024;16(3):477-502. DOI: 10.1108/QRFM-10-2021-0175
24. Rani P. An empirical examination of firm characteristics and its impact on listing day return. International Journal of Finance and Accounting. 2014;3(5):277-285. DOI: 10.5923/j.ijfa.20140305.01
25. Venkatesh S., Neupane S. Does ownership structure affect IPO underpricing: Evidence from Thai IPOs. Corporate Ownership & Control. 2006;3(2):106-115. DOI: 10.22495/cocv3i2p11
26. Sur S. Theoretical review of growth of e-commerce in India and its relevance in future business sustainability. Abhigyan. 2018;36(3):41-50. DOI: 10.56401/Abhigyan_36.3.2018.41-50
27. Ritter J. R. The long-run performance of initial public offerings. The Journal of Finance. 1991;46(1):3-27. DOI: 10.1111/j.1540-6261.1991.tb03743.x
28. Michaely R., Shaw W. H. The pricing of initial public offerings: Tests of adverse-selection and signaling theories. The Review of Financial Studies. 1994;7(2):279-319. DOI: 10.1093/rfs/7.2.279
29. Sohail M. K., Rehman A. Determinants of underpricing of IPOs regarding financial and non-financial firms in Pakistan. European Journal of Economics, Finance and Administrative Sciences. 2009;(15):62-73. URL: https://www.researchgate.net/publication/237567195_Determinants_of_UnderPricing_of_IPOs_Regarding_ Financial_Non-Financial_ Firms_in_Pakistan
30. Islam A., Ali R. An empirical investigation of the underpricing of initial public offerings in Chittagong Stock Exchange. International Journal of Economics and Finance. 2010;2(4):36-46. DOI: 10.5539/ijef.v2n4p36
31. Bansal R., Khanna A. Pricing mechanism and explaining underpricing of IPOs: Evidence from Bombay Stock Exchange, India. International Journal of Research in Finance and Marketing. 2012;2(2):205-216. URL: https://www.academia.edu/1828194/_PRICING_MECHANISM_AND_EXPLAINING_UNDERPRICING_OF_IPOS_EVIDENCE_FROM_BOMBAY_STOCK_EXCHANGE_INDIA
32. Deb S. S., Marisetty V. B. Information content of IPO grading. Journal of Banking & Finance. 2010;34(9):2294- 2305. DOI: 10.1016/j.jbankfin.2010.02.018
33. Lizińska J., Czapiewski L. Performance of Polish IPO firms: Size and profitability effect. Gospodarka Narodowa: The Polish Journal of Economics. 2014;269(1):53-71. DOI: 10.33119/GN/100877
34. Bubna A., Prabhala N. Anchor investors in IPOs. Mumbai: National Stock Exchange; 2014. 45 p. URL: https://w4.stern.nyu.edu/finance/docs/WP/2014/AnchorIPOs_BubnaPrabhala.pdf
35. Sahoo S. Do anchor investors create value for initial public offerings? An empirical investigation. IIMB Management Review. 2017;29(4):259-275. DOI: 10.1016/j.iimb.2017.11.004
36. Wang Y., Wang G. IPO underpricing and long-term performance in China: The perspective of price limit policy. Managerial Finance. 2021;47(9):1233-1252. DOI: 10.1108/MF-08-2020-0428
37. Sochi M. H., Islam R. What impacts IPO underpricing? Evidence from Dhaka Stock Exchange. International Journal of Business and Management. 2018;13(3):88-97. DOI:10.5539/ijbm.v13n3p88
38. Kumar A., Sahoo S. Do anchor investors affect long run performance? Evidence from Indian IPO markets. Pacific Accounting Review. 2021;33(3):322-346. DOI: 10.1108/PAR-09-2020-0149
39. Mangala D., Dhanda M. Earnings management and listing day performance of IPOs in India. Journal of Accounting in Emerging Economies. 2022;12(5):812-839. DOI: 10.1108/JAEE-01-2021-0032
40. Ranganathan K., Saraogi A. What explains voluntary premarket underpricing and aftermarket mispricing in Indian IPOs? Journal of Behavioral and Experimental Finance. 2021;32:100565. DOI: 10.1016/j.jbef.2021.100565
41. Mulchandani P., Pandey R., Debata B., Renganathan J. Investor attention and IPO returns: Evidence from Indian markets. Journal of Economic and Administrative Sciences. 2025;41(3):1002-1019. DOI: 10.1108/JEAS-03-2022-0075
42. Priyesh V. P., Jijo L. P. Do retail and institutional investors react differently to earnings management? Evidence from Indian IPOs. Journal of Applied Accounting Research. 2024;25(3):732-747. DOI: 10.1108/JAAR-10-2022-0281
43. Arora N., Singh B. Do female directors signal Indian SME IPOs quality? Evidence from a quantile regression approach. Global Business Review. 2023;24(1):185-205. DOI: 10.1177/0972150920911806
44. Knez P. J., Ready M. J. On the robustness of size and book-to-market in cross-sectional regressions. The Journal of Finance. 1997;52(4):1355-1382. DOI: 10.2307/2329439
45. Sahoo S., Rajib P. After market pricing performance of Initial Public Offerings (IPOs): Indian IPO market 2002-2006. Vikalpa. 2010;35(4):27-44. DOI: 10.1177/0256090920100403
46. Mumtaz M. Z., Smith Z. A. The aftermarket performance of initial public offerings in Pakistan. Lahore Journal of Economics. 2016;21(1):23-68. DOI: 10.35536/lje.2016.v21.i1.a2
47. Sehgal S., Singh B. Determinants of initial and long-run performance of IPOs in Indian Stock Market. Asia Pacific Business Review. 2008;4(4):24-37. DOI: 10.1177/097324700800400403
48. Chhabra S., Kiran R., Sah A. N. Information asymmetry leads to underpricing: Malidation through SEM for Indian IPOs. Program. 2017;51(2):116-131. DOI: 10.1108/PROG-01-2016-0009
49. Mahmood F., Xia X., Ali M., Usman M., Shahid H. How Asian and global economic crises prevail in Chinese IPO and stock market efficiency. International Business Research. 2011;4(2):226-237. DOI: 10.5539/ibr.v4n2p226
50. Gupta K., Raman T. V., Deol O.S, Gupta K. Impact of risk disclosures on IPO performance: Evidence from India. Finance: Theory and Practice. 2021;25(6):128-144. DOI: 10.26794/2587-5671-2020-25-6-128-144
51. Rossovski J., Lucey B. M., Helbing P. Determinants of IPO overpricing. British Journal of Management. 2025;36(1):383-399. DOI: 10.1111/1467-8551.12858
52. Nikulin E. D., Sviridov A. A. Earnings management by Russian companies at the initial public offering. Finance: Theory and Practice. 2019;23(1):147-164. DOI: 10.26794/2587-5671-2019-23-1-147-164
Review
For citations:
Soni T., Singh A., Satapathy D. IPO Characteristics and Financial Outcomes: Empirical Evidence from Indian IPOs. Finance: Theory and Practice. 2026;30(2):241-252. https://doi.org/10.26794/2587-5671-2026-30-2-241-252
Views:
175
JATS XML
Email this article 