An Empirical Investigation of the Underpricing of Initial PublicOfferings in the Chittagong Stock Exchange

The levels of underpricing in IPOs and its determinants of the Chittagong Stock Exchange (CSE)

Possible reasons for underpricing includeo self-interested investment bankers(Baron and Holmstrom, 1980; Baron,

1982),o the “winner’s curse” (Rock, 1986),o lawsuit avoidance (Tinic, 1988), o signaling (Allen and Faulhaber, 1989; Grinblatt and Hwang,1989; Welch,

1989),o market incompleteness (Mauer and Senbet, 1992),o bookbuilding (Benveniste and Spindt, 1989),o and informational cascades (Welch, 1992).

IPO overpricing /underpricing on industry basis/yearly basis Variable used: (Multiple regression) [+]Age of the firm (date of incorporation to the date of IPO) [+]Size of the firm(net assets of the company in the year of IPO) [-] Size of the offer [no relation]Timing of the offer(the time taken from the date of listing to the offer

date) [-]Type of industry [+]years of operation before listing

Underpricing of initial publicofferings in Bangladesh

analysis of the short-run underpricing of initial public offerings (IPO) in Bangladesh and attempts to identify the factors which contribute to such underpricing in this heavily regulated underwriting market.

log of total issued capital; expenditure on IPO issue divided by the total issued capital; log of return volatility over the first 21 days; percentage share of the company director in the total issued capita percentage of total issued capital offered to the general public; FDUM¼1 if foreigners have a stake in the new issue, 0 otherwise; AGE: log of age of the firm; SVOL: percentage over/under subscription of the new issue; SALE: sales revenue of the issuing firm as a percentage of total assets prior to going public; LTDR: long-term debt over total assets prior to going