A Performance based Ranking of Initial Public Offerings (IPOs) in India
DOI:
https://doi.org/10.31181/10023022023bKeywords:
Market Performance, Fundamental Financial Ratios, Multi-Criteria Decision Making (MCDM), LOgarithmic Percentage Change-driven Objective Weighting (LOPCOW) Method, Initial Public Offering (IPO)Abstract
In recent times, Indian Stock Market (ISM) has been witnessing a surge in the number of IPOs listed in stock exchanges. However, in many occasions it has been noticed that post-listing performance of several IPOs are below par to the expectations of the investors. IPO performance has been one of the major concerns. In this context, the present paper endeavours to carry out a comparative performance assessment of a list of IPOs. We consider a period of three years after listing. Our sample consists of a list of IPOs having heterogeneous nature of business operations and introduced in 2018. We consider two aspects of the performance such as market-based indicators and fundamental efficiency in terms of profitability, liquidity and risk. For comparison, LOgarithmic Percentage Change-driven Objective Weighting (LOPCOW) is used. The study period is considered as Fy 2020-21. The results reflect that for IPOs, market performance does not necessarily because of the fundamental efficiency. Further, we notice that the nature of equity ownership does not influence the market performance significantly. We surmise that during initial years, the performance of the IPOs at the marketplace is more driven by speculations and short-term goals of the investors. The result of validation test indicates that the ranking using LOPCOW method is comparable and consistent with a widely used model like Entropy.
Downloads
References
Ahmad‐Zaluki, N. A., Campbell, K., & Goodacre, A. (2007). The long run share price performance of Malaysian initial public offerings (IPOs). Journal of Business Finance & Accounting, 34(1‐2), 78-110.
AlShiab, M. S. (2018). Initial public offerings short and long term performance of MENA countries. European Scientific Journal, ESJ, 14(10), 234.
Alswalmeh, A. A. A., Dali, N. R. S. B. M., & Alta’ani, A. Z. (2021). The Effects of Accounting and Market Indicators towards Stock Return of Amman Stock Exchange Index Constituents. E-Prosiding Seminar Antarabangsa Islam dan Sains 2021 “Wawasan Kemakmuran Bersama 2030” Khamis, 9 September 2021, Universiti Sains Islam Malaysia, 680-698.
Babu, T. R. C., & Dsouza, A. E. C. (2021). Post Listing IPO Returns and Performance in India: An Empirical Investigation. Journal of Financial Studies & Research, 418441, 1-20.
Badi, I., Muhammad, L. J., Abubakar, M., & Bakır, M. (2022). Measuring sustainability performance indicators using FUCOM-MARCOS methods. Operational Research in Engineering Sciences: Theory and Applications, 5(2), 99-116.
Baltakienė, M., Baltakys, K., Kanniainen, J., Pedreschi, D., & Lillo, F. (2019). Clusters of investors around initial public offering. Palgrave Communications, 5(1), 1-14.
Biswas, S. (2020). Measuring performance of healthcare supply chains in India: A comparative analysis of multi-criteria decision making methods. Decision Making: Applications in Management and Engineering, 3(2), 162-189.
Biswas, S., & Anand, O. P. (2020). Logistics Competitiveness Index-Based Comparison of BRICS and G7 Countries: An Integrated PSI-PIV Approach. IUP Journal of Supply Chain Management, 17(2), 32-57.
Biswas, S., Bandyopadhyay, G., Guha, B., & Bhattacharjee, M. (2019). An ensemble approach for portfolio selection in a multi-criteria decision making framework. Decision Making: Applications in Management and Engineering, 2(2), 138-158.
Biswas, S., Chatterjee, S., & Majumder, S. (2022a). A Spherical Fuzzy Framework for Sales Personnel Selection. Journal of Computational and Cognitive Engineering. https://doi.org/10.47852/bonviewJCCE2202357
Biswas, S., Bandyopadhyay, G., & Mukhopadhyaya, J. N. (2022b). A multi-criteria based analytic framework for exploring the impact of Covid-19 on firm performance in emerging market. Decision Analytics Journal, 5, 100143.
Biswas, S., Bandyopadhyay, G., & Mukhopadhyaya, J. N. (2022c). A multi-criteria framework for comparing dividend pay capabilities: Evidence from Indian FMCG and consumer durable sector. Decision Making: Applications in Management and Engineering, 5(2), 140-175.
Biswas, S., Bandyopadhyay, G., Pamucar, D., & Sanyal, A. (2022d). A decision making framework for comparing sales and operational performance of firms in emerging market. International Journal of Knowledge-based and Intelligent Engineering Systems, 26(3), 229-248.
Biswas, S., Bandyopadhyay, G., Pamucar, D., & Joshi, N. (2022e). A Multi-Criteria Based Stock Selection Framework in Emerging Market. Operational Research in Engineering Sciences: Theory and Applications, 5(3), 153-193.
Biswas, S., Majumder, S., & Dawn, S. K. (2022f). Comparing the socioeconomic development of G7 and BRICS countries and resilience to COVID-19: An entropy–MARCOS framework. Business Perspectives and Research, 10(2), 286-303.
Biswas, S., Pamučar, D., Božanić, D., & Halder, B. (2022g). A new spherical fuzzy LBWA-MULTIMOOSRAL framework: Application in evaluation of leanness of MSMEs in India. Mathematical Problems in Engineering, 2022, 1-17.
Biswas, S., Pamucar, D., Kar, S., & Sana, S. S. (2021a). A New Integrated FUCOM–CODAS Framework with Fermatean Fuzzy Information for Multi-Criteria Group Decision-Making. Symmetry, 13(12), 2430.
Biswas, S., Majumder, S., Pamucar, D., & Dawn, S. K. (2021b). An extended LBWA framework in picture fuzzy environment using actual score measures application in social enterprise systems. International Journal of Enterprise Information Systems, 17(4), 37-68.
Biswas, S., Pamucar, D., Chowdhury, P., & Kar, S. (2021c). A new decision support framework with picture fuzzy information: comparison of video conferencing platforms for higher education in India. Discrete Dynamics in Nature and Society, 2021, 1-22.
Bustani, B., Kurniaty, K., & Widyanti, R. (2021). The Effect of Earning Per Share, Price to Book Value, Dividend Payout Ratio, and Net Profit Margin on the Stock Price in Indonesia Stock Exchange. Jurnal Maksipreneur: Manajemen, Koperasi, dan Entrepreneurship, 11(1), 1-18.
Che-Yahya, N., & Matsuura, Y. (2021). Does Individual Investors' Sentiment Explain Japanese IPO Aftermarket Performance?. The Journal of Asian Finance, Economics and Business, 8(4), 1079-1090.
Dang, H. N., Vu, V. T. T., Ngo, X. T., & Hoang, H. T. V. (2019). Study the impact of growth, firm size, capital structure, and profitability on enterprise value: Evidence of enterprises in Vietnam. Journal of Corporate Accounting & Finance, 30(1), 144-160.
Ecer, F., & Pamucar, D. (2022). A novel LOPCOW-DOBI multi-criteria sustainability performance assessment methodology: An application in developing country banking sector. Omega, 112, 102690.
EY Report (2021). India IPO Trends Report. https://www.ey.com/en_in/ipo/india-ipo-trends-report. Accessed on 02 May 2021.
Gupta, S., Bandyopadhyay, G., Bhattacharjee, M., & Biswas, S. (2019a). Portfolio Selection using DEA-COPRAS at risk–return interface based on NSE (India). International Journal of Innovative Technology and Exploring Engineering, 8(10), 4078-4086.
Gupta, S., Bandyopadhyay, G., Biswas, S., & Upadhyay, A. (2019b). A hybrid machine learning and dynamic nonlinear framework for determination of optimum portfolio structure. In Innovations in Computer Science and Engineering, 437-448. Singapore: Springer.
Hertina, D., & Saudi, M. H. M. (2019). Stock return: Impact of return on asset, return on equity, debt to equity ratio and earning per share. International Journal of Innovation, Creativity and Change, 6(12), 93-104.
Huang, Y. S., Li, M., & Chen, C. R. (2019). Financial market development, market transparency, and IPO performance. Pacific-Basin Finance Journal, 55, 63-81.
Islam, M., Khan, T. R., Choudhury, T. T., & Adnan, A. M. (2014). How earning per share (EPS) affects on share price and firm value. European Journal of Business and Management, 6(17), 97-108.
Jain, B. A., & Kini, O. (1994). The post‐issue operating performance of IPO firms. The journal of finance, 49(5), 1699-1726.
Kalemli-Özcan, Ş., Laeven, L., & Moreno, D. (2018). Debt overhang, rollover risk, and corporate investment: Evidence from the European crisis. NBER Working Paper 24555. http://www.nber.org/papers/w24555
Kamaludin, K., & Zakaria, N. (2019). The short and long-run performance of Sharia-compliant initial public offerings (IPOs) in the emerging market: Evidence from the Saudi Arabia Share Market. Journal of Reviews on Global Economics, 8, 706-716.
Karmakar, P., Dutta, P., & Biswas, S. (2018). Assessment of mutual fund performance using distance based multi-criteria decision making techniques-An Indian perspective. Research bulletin, 44(1), 17-38.
Kongkaew, T., Tongkong, S., & Ngudgratoke, S. (2021). Moderating Effects of Founders’ Role on the Influence of Internationalization on IPO Performance of Listed Companies in Thailand. International Journal of Financial Studies, 9(3), 37.
Kooli, M., & Suret, J. M. (2004). The aftermarket performance of initial public offerings in Canada. Journal of Multinational Financial Management, 14(1), 47-66.
Kumar, A., & Sahoo, S. (2021). Do anchor investors affect long run performance? Evidence from Indian IPO markets. Pacific Accounting Review, 33(3), 322-346.
Kumar, A., Akhani, V., Dixit, A., Khetan, A., Misra, P., & Negi, R. (2021). An Empirical Analysis of Factors Influencing Listing Return of IPOs. In 2021 Emerging Trends in Industry 4.0 (ETI 4.0), 1-7. Raigarh, India: IEEE.
Kumar, M. P., & Kumara, N. M. (2021). Market capitalization: Pre and post COVID-19 analysis. Materials Today: Proceedings, 37, 2553-2557.
Kuria, E. G. (2014). The effects of initial public offering on the financial performance of companies listed at the Nairobi securities exchange. Doctoral dissertation, University Of Nairobi.
Laha, S., & Biswas, S. (2019). A hybrid unsupervised learning and multi-criteria decision making approach for performance evaluation of Indian banks. Accounting, 5(4), 169-184.
Lassala, C., Apetrei, A., & Sapena, J. (2017). Sustainability matter and financial performance of companies. Sustainability, 9(9), 1498.
Lizińska, J., & Czapiewski, L. (2018). Earnings management and the Long-Term market performance of Initial Public Offerings in Poland. In Finance and sustainability, 121-13. Cham: Springer.
Lowry, M. (2003). Why does IPO volume fluctuate so much?. Journal of Financial economics, 67(1), 3-40.
Mayur, M., & Mittal, S. (2014). Relationship between underpricing and post IPO performance: evidence from Indian IPOs. Asia-Pacific Journal of Management Research and Innovation, 10(2), 129-136.
Mazumder, S., & Saha, P. (2021). COVID-19: Fear of pandemic and short-term IPO performance. Finance research letters, 43, 101977.
Mehmood, W., Mohd-Rashid, R., Abdullah, Y., Patwary, A. K., & Aman-Ullah, A. (2023). Inclusive mapping of initial public offerings: a bibliometric and literature review study. Quality & Quantity: International Journal of Methodology, 57(1), 655-700.
Mumtaz, M. Z., & Yoshino, N. (2021). Greenness index: IPO performance and portfolio allocation. Research in International Business and Finance, 57, 101398.
Murtala, S., Ibrahim, M., Lawal, S., & Abdullahi, B. B. (2018). Capital structure and return on capital employed of construction companies in Nigeria. African Journal of Accounting, Auditing and Finance, 6(1), 1-20.
Ogunlusi, O. E., & Obademi, O. (2021). The Impact of behavioural finance on investment decision-making: A study of selected investment banks in Nigeria. Global Business Review, 22(6), 1345-1361.
Pamucar, D., Torkayesh, A. E., & Biswas, S. (2022). Supplier selection in healthcare supply chain management during the COVID-19 pandemic: a novel fuzzy rough decision-making approach. Annals of Operations Research, 1-43.
Pamucar, D., Žižović, M., Biswas, S., & Božanić, D. (2021). A new logarithm methodology of additive weights (LMAW) for multi-criteria decision-making: Application in logistics. Facta Universitatis, Series: Mechanical Engineering, 19(3), 361-380.
Pastusiak, R., Miszczyńska, K., & Krzeczewski, B. (2016). Does public offering improve company’s financial performance? The example of Poland. Economic research-Ekonomska istraživanja, 29(1), 32-49.
Pramanik, P. K. D., Biswas, S., Pal, S., Marinković, D., & Choudhury, P. (2021). A comparative analysis of multi-criteria decision-making methods for resource selection in mobile crowd computing. Symmetry, 13(9), 1713.
Ritter, J. R., & Welch, I. (2002). A review of IPO activity, pricing, and allocations. The Journal of Finance, 57(4), 1795-1828.
Rudianto, D. (2021). Measuring the financial performance prior and after the initial public offering (IPO) of companies listed in the Indonesian stock exchange (IDX). In International Conference on Strategic Issues of Economics, Business and, Education (ICoSIEBE 2020), 231-237. Atlantis Press.
SEBI Report. Sub Section‐ I: Issues by Indian Companies in India. Available at: https://www.sebi.gov.in/sebi_data/commondocs/subsection1_p.pdf. Accessed 02 May 2022)
Shannon C. E. (1948). A mathematical theory of communication. The Bell System Technical Journal, 27(3), 379–423.
Singh, A. K., Attree, A. K., & Singhania, S. (2018). BFSI sector in India: A study of the post offering performance of IPO. International Journal of Research in Finance and Management, 1(2), 19-23.
The Economic Times (2021). IPO Market 2021: Fundraising hits record Rs 1 lakh crore mark as 63 issues hit Street, December 23, 2021.
Wasiuzzaman, S., Yong, F. L. K., Sundarasen, S. D. D., & Othman, N. S. (2018). Impact of disclosure of risk factors on the initial returns of initial public offerings (IPOs). Accounting Research Journal, 31(1), 46-62.
Yalcin, N., & Ünlü, U. (2018). A multi-criteria performance analysis of Initial Public Offering (IPO) firms using CRITIC and VIKOR methods. Technological and Economic development of Economy, 24(2), 534-560.
Yin, R. (2020). Investor Sentiment and Stock Return: Evidence from China. Retrieved from: https://ecommons.cornell.edu/bitstream/handle/1813/70283/Yin_cornell_0058O_10889.pdf?sequence=1. Accessed 12 May 2022. doi.org/10.17632/xwj98nb39r.1.
All site content, except where otherwise noted, is licensed under the 