The Effect Of Initial Public Offering Valuations On Equilibrium Market Value At Borsa Istanbul
Journal Title: International Journal of Business and Management Invention - Year 2017, Vol 6, Issue 9
Abstract
Effective valuation and pricing are vital to reduce the underpricing paradox in public offerings. In this study, 76 initial public offerings (IPO) that were offered in Borsa Istanbul between 2005 and 2015 have been examined. While there has been 4.33% underpricing in sampling period in BIST, and to observe how the valuation with 22.86% average discount rate that has been applied by underwriters have reflected the market equilibrium prices, share prices of all firms in sample have been revalued by historical discounted cash flow analysis that has been based on historical ratios which reflects historical economic track record of the firm. The valuation approaches most commonly preferred by the firms have been compared in terms of explanatory power by univariate regression analysis and it has been found that explanatory power of comparable firms is 84.9%, explanatory power of DCF is 93.7%, fair value is 96% and historical DCF is 98.3%.
Authors and Affiliations
Orhan Emre ELMA1 ,, İlhan KÜÇÜKKAPLAN2
Keywords
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