Understanding the Factors Influencing Pricing and Performance of Initial Public Offering: A Literature Review

Abstract

The Initial Public Offering (IPO) is remarkably discussed as the most powerful capital market instrument for investors and issuers. The objective of the paper is to review the literary work conducted on pricing and performance of initial public offerings to investigate important factors and prevailing themes of IPO pricing and performance. The focused keywords are ‘IPO Performance, Initial Public Offerings Performance, Post-IPO Performance, and IPO Initial Returns’. A simple descriptive approach to statistics and network, coupling and cluster approaches of bibliometric techniques are used in data description and analysis. It is observed that the underpricing and performance of IPO depend on important factors such as the strategic decision of the firm, management linkage, duration between allotment and listing of an IPO, investor relation, risk, leverage, earnings management, venture capital syndicate, management board, distinct signaling effects, political connection, group affiliation, institutional investors, agency problems, corporate governance and so forth. IPO performance gained prominence among scholars since 2008 which need to address the gaps as an opportunity for future research.