Intl. Conference on Economics, Finance & Business, Paris

FACTORS DETERMINING IPO UNDERPRICING ON THE WARSAW STOCK EXCHANGE

DOROTA PODEDWORNA-TARNOWSKA

Abstract:

The phenomenon of underpricing accompanying IPOs has been the subject of many studies based on the data coming from many stock exchanges operating around the world. Many concepts with different theoretical underpinnings and justifications have appeared in the literature, offering competing explanations for this phenomenon, such as those related to information asymmetry, behavioral aspects, institutional causes, and ownership and control. Empirical verification of the proposed theories depends on the time of the study and the market under study, and the results vary. The factors described in the literature affecting the level of underpricing relate to the characteristics of the market, the characteristics of the company, as well as the characteristics of the offering itself. IPO underpricing phenomenon and its determinants on the Polish stock market are relatively little researched and the results are inconclusive. The aim of the article is to identify and empirically verify determinants that affect the level of underpricing of an initial public offer in Poland. The research sample includes companies debuting on the regulated market of the Warsaw Stock Exchange between 2005 and 2022. The results of the study contribute to expanding the international scope of empirical research on underpricing in IPO. They may provide useful insights for various market participants to understand the impact of determinants on underpricing and, in particular, the issuers’ decisions to go public and the investors’ decisions to make investments in IPO companies.

Keywords: initial public offering (IPO), underpricing, fundamental factors, offer related factors, market related factors.