| dc.description.abstract | Over the last three years there has been an upsurge of IPO activity. The reason for this
popularity is because of the worldwide trend towards privatization. The IPOs at the NSE
have been successful and have been characterized by massive oversubscriptions
indicating their potential as well as the popularity. Most studies analyze the performance
of companies around their Initial Public Offerings (IPOs). This study focused on returns
on pre-IPO, during and after an IPO. This research found that the size of the IPO has no
role to influence the market turnover.
The question that comes is how the investors show interest towards IPOs; whether they
mobilize their investments from the secondary market to the IPO seek alternative sources
other than liquidating their existing securities and whether as a result of such fund
mobilization, the transaction volumes face any pressure.
This study sought to establish whether the interest of investors towards IPOs creates
pressure on the performance of other stocks during the Pre-application period (Pre-IPO),
the application, allotment and the refund period (AAR), and Post allotment period (Post-
IPO). The results suggested that either the market has enormous capacity that the IPO
announcements did not have any effect on it, or the prospective investors do not rely on
the capital market as they keep huge funds to be invested.
Using data from NSE on the daily average market turnover and the turnover of the IPOs
during the listing month, the findings indicated that the market turnovers during this
period were not affected by the IPOs. The study established that the IPO size has no
effect on market turnover.
The research recommends that further research should be carried out to find out if the
other variables such as share price index and market capitalization are affected by an
IPO. Research can also be done to find out the source of investor liquidity during such
periods. | en |
