Regulatory Framework and IPO Underpricing
Journal Title: Scholars Journal of Economics, Business and Management - Year 2014, Vol 1, Issue 4
Abstract
Underpricing in IPOs is one of the widely studied areas of finance. The regulatory framework governing the IPOs is a deciding factor that can increase or reduce underpricing in IPOs. The regulatory framework is a guiding light for the investor to take fair decisions and also exercises strict control on the issuing firm. The pricing mechanism, through which the shares are issued, is one of the main regulatory guideline which affects the IPO underpricing. Fixed pricing and book building are the two most widely used pricing mechanism for the issue of IPOs. The shares can also be issued by using auction pricing but it is not much used and is applicable to some countries. This paper is an attempt to find out what major changes have been made in the regulatory framework for the issue on an IPO in India and to study the impact of regulatory framework on IPO underpricing. Keywords: Underpricing, IPO, Fixed Pricing, Book building, JEL Classification: G32
Authors and Affiliations
Lalit Bhalla, Dr. Vijay Kumar Kaushal
Keywords
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