Abstract:
The Indian primary market has seen several fluctuations in the post-SEBI era. The introduction of SEBI and abolition of CCI created ‘hot issue phenomenon’ in the market wherein several new issues entered the market, however, only a few managed to survive in the aftermarket. This paper explores the survival profile of 3125 IPOs issued during 1992-1996 using most sophisticated methodologies i.e., Logistic Regression and Survival Analysis. The models take a range of information concerning offering, market, and corporate specific characteristics of IPOs. The empirical investigation reveals that most of the IPOs entered the market in hot issue period (1992-1996) but they failed to survive longer in the market. Overall, the Kaplan-Meier estimation exhibits a significant decline in survival rate and a growth in hazard rate during the first 50-60 months of listing. The offering characteristics such as issue size, lead manager’s reputation, and IPO demand exhibit a positive influence, whereas initial returns, risk, and list delay exhibit a negative influence on the endurance of IPOs. The analysis of market specific variables and survival profile of IPOs reveals that issues in the period of high IPO activity fails to sustain longer on the exchange. The results of corporate specific variables validates that age of the company not only enhances the odds of survival of IPOs but also accelerates their survival duration in the aftermarket. The survival profile of IPOs varies across the several industries as well. The findings of this study will have fruitful implication for the issuers, investors, regulators, and the entire capital market as they can evaluate the future prospects of IPOs and can take rational decisions accordingly.
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