Long-Run Performance of IPO Market in India

Abstract

In this paper, we examine the Long-run performance of initial public offerings (IPOs). The data has been taken for 31 IPOs from the year 2000 to 2003. We have used Logistic Regression Model through SPSS Version 16 to test for the relationship between long run performance of IPOs and short run performance variables of the company. The analysis shows that the long run variables have no relationship with short-run variables or else have negative relationship. With some of the variables it has positive relationship. It shows anomaly. The companies having listing gain have negative current ratio, debt equity ratio and return on net worth and the companies having short-run gain has negative current ratio and debt equity ratio. The theory supports the view that for IPO markets to be efficient there should be low listing gain, moderate short-run gain and high long-run gain. Only then there will be long term development of IPO market. But the actual situation is opposite. The companies have listing gain, short-run gain but they are not able to give long run gain.

Keywords: IPO, Short-run Performance, Long Run Performance

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