Examining The Under-Pricing Of Select IPOs In India With Respect To Differences In Merchant Bankers’ Reputation

Abstract The performance of Initial Public Offerings (IPOs) in the financial markets is a relevant issue in the present day. Usually, the listing day performance of the IPOs shows under-pricing, which might be caused by the presence and occurrence of different factors. Since, the IPOs play a significant role in money mobilisation of an economy. Thus, it is significant to study the significant differences between the IPOs’ closing price as on the first day after listing and the issue price. The merchant bankers play a vital role in setting the issue price of the IPOs. Their contribution in the process of capital formation can never be undervalued. Many IPOs companies rely on the reputation or the goodwill of the merchant banking companies while hiring them as book running lead managers (BRLMs) in the public issue process. The study explores the listing day price performance of the IPOs in respect of the various classifications of the IPOs according to the reputation of the merchant bankers who managed their issue.