Short and Long-run Performance of Bookbuilt IPOs in India

Abstract

One of the important reforms Indian markets witnessed in the recent past is the introduction of issuing sharesthrough the book building process which aims at efficient price discovery. The paper attempts to see how theIPOs issued through book building process fare both in short-run as well as in long run. Results indicate that theIPOs are under-priced as is evidenced by the positive listing day returns and are out performing the market inthe subsequent months almost up to twenty four months. However, after two years of listing they generatenegative returns. This finding is consistent with the /PO performance literature from the other countries butis incontrast with the first long run study on 1POs in the long run in India.