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Survey on Ipo underpricing in the Istanbul Stock Exchange

Author

Listed:
  • Metin ERCAN

    (Boğaziçi Üniversitesi)

  • Serhat ÇEVİKEL

    (Boğaziçi Üniversitesi)

Abstract

Literature suggests that initial public offering (IPO) underpricing is related to information asymmetry, signals conveyed by the issuers, intention of the issuers to raise additional funds through seasoned offerings, existence of agency costs between executives and shareholders, the bankers’ reputations and hot issue markets. This study tests whether the perceptions of market participants regarding these underpricing issues in an emerging market context confirm the international empirical evidence or not. One advantage of measuring the perceptions is that immeasurable factors that are explored through proxies in empirical studies - such as information asymmetry - can be directly surveyed. Findings reveal that among the two types of market participants (market professionals and public company executives) market professionals have a better insight into IPO dynamics. Theoretical expectations and previous empirical findings for hypotheses relating directly or indirectly to information asymmetry and signaling theory in IPO underpricing are confirmed especially by the perceptions of market professionals

Suggested Citation

  • Metin ERCAN & Serhat ÇEVİKEL, 2011. "Survey on Ipo underpricing in the Istanbul Stock Exchange," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 26(305), pages 85-117.
  • Handle: RePEc:iif:iifjrn:v:26:y:2011:i:305:p:85-117
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    More about this item

    Keywords

    IPO; underpricing; Istanbul Stock Exchange; Survey; Asymmetric information; Signalling theory; Perceptions; Turkey;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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