INVESTOR EXPECTATIONS ON RETURN AND TRUST ON IPO GRADING: AN EMPIRICAL ANALYSIS

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1 International Journal of Management (IJM) Volume 7, Issue 3, March-April 2016, pp , Article ID: IJM_07_03_016 Available online at Journal Impact Factor (2016): (Calculated by GISI) ISSN Print: and ISSN Online: IAEME Publication INVESTOR EXPECTATIONS ON RETURN AND TRUST ON IPO GRADING: AN EMPIRICAL ANALYSIS Biju Thomas Muttath Head Finance (Star Group), Research Scholar, R&D Centre, Bharathiar University, Coimbatore 46, T.N, India Dr. Assissi Menachery Professor, Loyola Institute of Technology & Science, K.K Dist, T.N, India ABSTRACT Oversubscription during IPO is the result of demand over supply due to investors keen interest and expectation to subscribe new shares. Grading agencies play a major role in attracting investors to subscribe shares during IPO. This is due to the trust that investors have on the grading agency, regarding its capability to perform research on the key fundamental indicators. Informed and knowledgeable investors act vigorously to get maximum shares during the initial public offer. Book building pricing method plays vital role in attracting the investors who anticipate efficient price discovery. The study attempts to provide insights to investors on how significantly efficient the listing prices of oversubscribed shares between 1 to 5 grades by approved rating agencies are; as well as the profitability in investing oversubscribed IPOs with respect to the 1) Close price of the listing day 2) Short term and 3) Long term returns in both manufacturing and service sector. Key words: Book building, Grading, Hot Issue Market, IPO, Under-pricing) Cite this Article: Biju Thomas Muttath and Dr. Assissi Menachery, Investor Expectations on Return and Trust on IPO Grading: An Empirical Analysis. International Journal of Management, 7(3), 2016, pp INTRODUCTION Companies opt for Initial Public Offerings (IPOs) and approach potential investors for capital, to raise funds for their various strategic plans. However, for an investor it is questionable as to whether it makes sense to subscribe to the deluge offerings or not editor@iaeme.com

2 Investor Expectations on Return and Trust on IPO Grading: An Empirical Analysis Investors do not pursue value strategies because they may not be aware of the data, or that much of evidence is refuted by the conclusions offered by the consultants [1]. Attracting and persuading the investor is the tactic of the investment banker and other intermediaries. Investors are less informed about the fate of the issuers but glitters the charms of the shares where insanity works among the investors [2]. In Indian IPO market, book building mechanism was introduced in 1999 and since then gained popularity particularly in respect of large IPOs. In this paper, researchers attempts to study on how significantly efficient the listing prices of oversubscribed graded and non-graded IPO s with respect to 1) Close price of the first day 2) Short term return and 3) Long term returns among manufacturing and service sectors. Oversubscription of the IPO shares is the combined outcome of various perceptions of the investors. Bull markets and irrational behavior of the investors create a hot issue market where demand for new issues became very high [3]. In bull market, when investors are greedy for buying stocks such IPOs, they find their way to the hot issue market [4]. During this time, investors become irrational and their greed to make money become prominent by investing in anything [5]. But such things cannot happen in market especially in bull market, as the intention of issuers is to raise maximum resources [6]. The expectations of the investors define whether the shares are under priced or not [7]. Under-pricing of IPOs brought to the market by reputable underwriters is lower than those brought by non reputable underwriters [8, 9]. While an IPO enhances a firm s legitimacy, significant uncertainties remain about its capabilities [10]. This study reveals the reality of oversubscribed IPO shares during the period, 2006 to 2010, based on the investors perception on hot issue and under pricing phenomenon. IPO grading is a service that provides an assessment of fundamentals regarding quality of equity shares offered to aid comparative assessment which would be a useful information and investment tool to investors [11]. This way, the investor, by trusting on the IPO grading can decide whether the particular offer has potential to bring returns or not. IPO grading methodology examines the key variables such as: i) Business and Competitive position, ii) New projects- risks and Prospects, iii) Financial position and Prospects, iv) Management Quality, v) Corporate governance practices and vi) Compliance and litigation history. ICRA and CARE have the following 5 point scale grading IPO fundamentals. Grade 5 Strong Fundamentals, Grade 4 Above average Fundamentals, Grade 3 Average Fundamentals, Grade 2 Below average Fundamentals, Grade 1 Poor Fundamentals. During many IPOs in India have vanished looting millions of public funds. The regulator of Indian Stock Market, The Security Exchange Board of India (SEBI) made grading of IPOs by all companies mandatory from May 1, 2007 to help investors make informed decision and grading to be done by the SEBI- registered crediting rating agencies. The rationale for such move, as per SEBI, is to protect the retail investors from fly-by- night entrepreneurs. After six years, SEBI scraped the mandatory policy of grading on December 24, 2013 making the grading norms as voluntary. Grading is resulting in an analysis of fundamentals and the grades should be conveyed the same information to the uninformed investors, what the costly research would be conveying to the institutional investors [12]. Investors incur a lower cost of information accumulation if an IPO has some backing that signals better quality [13]. IPO grading decreases underpricing and positively influences the demand of retail investors. In emerging markets, regulators role to signal the quality of an IPO editor@iaeme.com

3 Biju Thomas Muttath and Dr. Assissi Menachery contributes towards the market welfare [11]. Studies also reveal that IPO grading has limited influence on the IPO demand. It is not evident in Indian IPO market that IPO pricing improves due to the introduction of IPO grading [14]. Shares which do not have grading have higher short term return than graded [15]. Study on IPO grading on under-pricing [16], reveals no significant influence between IPO grades and subsequent market performance. Thus these analyses reveal the contrary results between IPO grading and their performance. This research aims to examine the similarities or differences among IPO grading and non-grading with respect to its returns in manufacturing and service sectors during different investment durations. Even though various studies on IPOs performance have been carried out in different periods, the researchers intend to analyse the bull and bear phases of market, IPO offerings in terms of total numbers of IPOs and influence of grading in performance of the shares. This is because, values and IPOs are the reflections of bear and bull markets respectively. Hence, researchers have taken up the time period that integrate both bull and bear run to ensure homogeneity is the period both bull and bear phases are apparent (Fig.1). Hence IPOs performance of these periods had been taken into consideration to get a complete picture. Figure 1 (NSE INDEX- NIFTY) Bull and Bear Rally during Bear Rally Bull Rally-1 Bull Rally-2 2-Jan-06 2-Jan-07 2-Jan-08 2-Jan-09 2-Jan-10 Moreover, special focus on manufacturing and service sectors with respect to IPO performance in these periods has given preference in the present study. Other studies with comparative analysis on manufacturing and service sector found to be scarce. Hence, comparative analysis of the manufacturing and service sectors on the: 1. Listing day(first day) return 2. Short term return, and 3. Long term return would give insight to the investors regarding the right time for investment in hot issue shares. 2. OBJECTIVES OF THE STUDY 1. To analyze and study the returns obtained while investing in graded IPOs on various time periods such as a) First day of trade b) Short term basis and c) Long term basis 2. To analyze and study the returns obtained while investing in graded IPOs belonging to manufacturing sector on various time periods such as a) First day of trade b) Short term basis and c) Long term basis editor@iaeme.com

4 Investor Expectations on Return and Trust on IPO Grading: An Empirical Analysis 3. To analyze and study the returns obtained while investing in graded IPOs belonging to service sector on various time periods such as a) First day of trade b) Short term basis and c) Long term basis. 4. To analyze and study the returns obtained while investing in hot issue shares (oversubscribed IPOs) on various time periods such as a) First day of trade b) Short term basis and c) Long term basis. 5. To analyze and study the returns obtained while investing in hot issue shares (oversubscribed IPOs) belonging to manufacturing sector on various time periods such as a) First day of trade, b) Short term basis and c) Long term basis. 6. To analyze and study the returns obtained while investing in hot issue shares (oversubscribed IPOs) belonging to service sector on various time periods such as a) First day of trade b) Short term basis and c) Long term basis Hypotheses 1. There is no significant relationship between the average rates of returns obtained while investing in hot issue shares (oversubscribed IPOs) and the time periods such as a) First day of trade b) Short term and c) Long term. 2. There is no significant relationship between the average rates of returns obtained while investing in hot issue shares (oversubscribed IPOs) in manufacturing sector and the time periods such as a) First day of trade b) Short term and c) Long term. 3. There is no significant relationship between the average rates of returns obtained while investing in hot issue shares (oversubscribed IPOs) in service sector and the time periods such as a) First day of trade b) Short term and c) Long term. 4. There is no significant relationship between the average rates of returns obtained while investing in hot issue shares (oversubscribed IPOs) and the time periods such as a) First day of trade b) Short term and c) Long term. 5. There is no significant relationship between the average rates of returns obtained while investing in hot issue shares (over subscribed) in manufacturing sector and the time periods such as a) First day of trade b) Short term and c) Long term. 6. There is no significant relationship between the average rates of returns obtained while investing in hot issue shares (over subscribed) in service sector and the time periods such as a) First day of trade, b) Short term and c) Long term Methodology Sample Sample containing 220 from 321 companies came out with IPO, during the period have been considered in the study (Table 1). Out of 220 companies 94 were graded by registered agencies (Table 2). The information is drawn from the SEBI, NSE and ICRA. Table 1 Number of IPO s Year wise IPOs & Sampling Frame Year Total Population Sample editor@iaeme.com

5 Biju Thomas Muttath and Dr. Assissi Menachery Table 2 Grading Sector Wise Grades Sector High (4 and 5) Medium (3) Low (1 and 2) Total Service Manufacturing Total Sampling frame and Characteristics It has been observed that all shares were oversubscribed by investors. The sample consists of 220 companies are drawn on the criteria of availability of information on IPO regarding book building price, issue date, issue price, listing date, listing day, close price, short term price and long term price. Book building price, Return on first day, Short term return and Long term return have been considered for the analysis. Return on first day is the return on the closing hours of the listing day. Short term return is considered as the return after the first year of listing and Long term return is considered as return on 30 th October Long term is considered as more than five years. These returns are again classified as positive and negative returns. The shares have categorized into two sectors such as manufacturing and service. The graded shares are grouped into three categories such as High, Medium and Low. Shares with 4 and 5 grades are categorized as high grade, shares with 3 grade are categorized as medium grade and shares with 1 and 2 grades are categorized as low grade Technique Cross sectional analysis is carried out to explore the significance or difference with respect to returns generated in various time periods. Data collected were analyzed using various statistical tools and the results are presented. Null hypotheses formulated for the purpose of present investigation are put together using inferential statistical tools. Chi-Square test is used to find out the significant association between sectors, grading and returns. During discussion, attention has to been given in arriving at a conclusive perspective on the analysis, hypotheses testing and interpretation of data related to the variables. The results are discussed in detail Analysis Results and Discussion Analysis: Grading and Listing day return It is clear from the Table 3 that out of the total 94 shares that have been graded, 37 (39.4%) shares have given negative return and 57 (60.6%) shares have given positive return. While considering the shares that have graded high, out of 25 shares, 4 (16%) shares have given negative return and 21 (84%) shares have given positive returns. Among the shares that have been graded as medium, out of 41 shares, 19 (46.3%) shares have given negative return and 22 (53.7%) shares gave positive returns. When low graded shares are considered, out of 28 shares 14 (50%) shares gave negative return and 14 (50%) shares have given positive returns on first day of listing editor@iaeme.com

6 Investor Expectations on Return and Trust on IPO Grading: An Empirical Analysis Table 3 Grading and Listing day return Classification of Return Grading Negative Positive Total High 4 (16%) 21 (84%) 25(100%) Medium 19 (46.3%) 22 (53.7%) 41(100%) Low 14 (50%) 14 (50%) 28(100%) Total 37 (39.4%) 57 (60.6%) 94(100%) From Table 4 it is observed that the grading influences listing day returns whether positive or negative. Further, the results of Chi-square provide the first indication that the hypotheses is not supported, grading has an influence on listing day returns whether positive or negative. Hence we reject the null hypotheses that there is significant relationship between grading and listing day returns (positive or negative). It is inferred from table 4 that there is relationship between grading and listing day returns. Table 4 Chi Square Listing day return Value df Asymp. Sig. (2-sided) Pearson Chi-Square Likelihood Ratio Linear-by-Linear As N of Valid Cases 94 **Significant at 0.05 significance level It is found that 60.6% of the graded IPOs have provided positive return on the listing day. Among this, while considering higher grades 84% has provided positive return on the listing day, whereas in medium grade 53.7% have got positive return and in low grade 50% have got positive return. From this it can be concluded that investing in higher graded IPO s are advisable, provided the shares are sold on the first day of the listing. Another possibility is that to short sell such shares on the listing day. The study supports the findings of previous studies [2,17,18,19] where they establish the presence of underpricing during the initial book building process and creating artificial demand for retail investors during the initial hike of share price on the first day. This is reported to be the advantage of information edge, which financial institutions have over retail investors Analysis and Discussion: Grading and Short term return It is clear from Table 5 that among the total 94 shares that have been graded, 74 (78.7%) shares have given negative return and 20 (21.3%) shares have given positive return. While considering the shares that have graded high, among the 25 shares, 18 (72%) shares have given negative return and 7 (28%) shares gave positive returns. In the category of medium graded shares, among the 41 shares, 30 (73.2%) shares have given negative return and 11(26.8%) shares gave positive returns. Where as in low graded shares out of 28 shares 26 (92.9%) shares have given negative return and 2 (7.1%) shares gave positive returns in short term editor@iaeme.com

7 Biju Thomas Muttath and Dr. Assissi Menachery Table 5 Grading and Short term return Classification of Return Grading Negative Positive Total High 18 (72%) 7 (28%) 25 (100%) Medium 30 (73.2%) 11(23.8%) 41 (100%) Low 26 (92.9%) 2 (7.1%) 28 (100%) Total 74 (78.7%) 20(21.3%) 94 (100%) From Table 6 it is observed that grading does not influence short term returns whether positive or negative. Further the results of Chi-square provide the first indication that the hypotheses should support grading of IPO s does not have any relationship at 0.05 confidence level on short term returns whether positive or negative. However it shows statistically significant at 0.01 confidence level. Hence we accept the null hypotheses that there is no significant relationship between grading and short term returns (positive or negative) at 0.05 confidence level. It is inferred from the above table that there is no relationship between grading and short term returns (positive or negative). Table 6 Chi Square Short term return Value Df Asymp. Sig. (2-sided) Pearson Chi-Square Likelihood Ratio Linear-by-Linear As N of Valid Cases 94 *Not Significant at 0.05 and 0.01 significance level It is clear from the Table 7 that out of the total 94 shares that have been graded, 70 (74.5%) shares have given negative return and 24 (25.5%) shares have given positive return. While considering the shares that have graded high, out of 25 shares 16 (64%) shares have given negative return and 9 (36%) shares have given positive returns. In medium grade category, out of 41 shares 31 (75.6%) shares have given negative return and 10 (24.4%) shares have given positive returns. Where as in low graded shares out of 28 shares 23 (82.1%) shares have given negative return and 5(17.9%) shares have given positive returns in long term. Table 7 Grading and Long term return Classification of Return Grading Negative Positive Total High 16(64%) 9 (36%) 25(100%) Medium 31(75.6%) 10(24.4%) 41(100%) Low 23(82.1%) 5(17.9%) 28(100%) Total 70(74.5%) 24(25.5%) 94(100%) editor@iaeme.com

8 Investor Expectations on Return and Trust on IPO Grading: An Empirical Analysis From the Table 8 (Appendix) it is observed that the grading does not influence long return whether positive or negative. Further the results of Chi-square provide the first indication that our hypotheses should support that grading of IPOs does not have any relationship on long term returns whether positive or negative. Hence we accept the null hypotheses that there is no relationship between grading and long term returns. Table 8 Chi Square Long term return Value Df Asymp. Sig. (2-sided) Pearson Chi-Square Likelihood Ratio Linear-by-Linear As No of Valid Cases 94 *Not Significant at 0.05 and 0.01 significance level Analysis and Discussion: Manufacturing and Service Sector It is clear from the Table 9 that among the total sample of 220 shares, 77 (35%) shares have given negative return and 143 (65 %) shares gave positive return. While considering the shares belong to service sector, among the 133 shares, 46 (34.6%) shares have given negative return and 87 (65.4%) shares have given positive returns. In manufacturing sector, among the 87 shares, 31 (35.6%) shares have given negative return and 56 (64.4%) shares have given positive returns on the listing day. It can be inferred that on listing day most of the shares generate positive return. Table 9 Sectors and Listing day Return Sectors Return Negative Positive Total Service 46 (34.6%) 87(65.4%) 133(100%) Manufacturing 31 (35.6%) 56 (64.4%) 87 (100%) Total 77 (35%) 143 (65 %) 220 (100%) It is clear from Table 10 that the sectors do not influence listing day returns whether positive or negative. Further the results of Chi-square provide the first indication that our hypotheses should be supported that sectors does not have an influence on listing day returns whether positive or negative. Hence we accept the null hypotheses that, there is no significant relationship between manufacturing and service sectors and the listing day return (positive or negative) editor@iaeme.com

9 Biju Thomas Muttath and Dr. Assissi Menachery Table 10 Chi Square Listing day Value Df Asymp.Sig. Exact Sig Exact Sig (1 (2-sided) (2 sided) sided) PearsonChi-Square Continuity correction Likelihood Ratio Fisher s Exact Test Linear-by-Linear As N of Valid Cases 220 *Not Significant at 0.05 and 0.01 significance level It is also clear from the study that among the total 220 oversubscribed IPO s belonging to service and manufacturing sectors, 65% of the total shares generated positive return on listing day. Among this, while considering the service sector, 65.4% has provided positive return and 64.4% of manufacturing sector provided positive return on the listing day. It can be inferred from the analysis that both service and manufacturing sectors are indifferent in providing return on listing day in between 64 to 66%. The study supports the findings of various studies [11,16,18,20,21] on the underperformance of IPOs in Indian and foreign stock markets and substantiate the prevalent under pricing phenomena. It is clear from the Table 11 that among the total sample of 220 shares, 151(68.6%) shares have given negative return and 69 (31.4%) shares have given positive return. While considering the shares belonging to service sector, among the 133 shares 94 (70.7%) shares have given negative return and 39 (29.3%) shares have given positive returns. In manufacturing sector, among the 87 shares, 57 (65.5%) shares have given negative return and 30 (34.5%) shares gave positive returns in short term. Table 11 Sectors and Short Term Return Sectors Return Negative Positive Total Service 94 (70.7%) 39 (29.3%) 133(100%) Manufacturing 57 (65.5%) 30 (34.5%) 87 (100%) Total 151(68.6%) 69 (31.4%) 220 (100%) It is clear from Table 12 that the sectors does not influence short term returns whether positive or negative. Further the results of Chi-square provide the first indication that our hypotheses should support that sectors do not have any influence on short term whether positive or negative. Hence we accept the null hypotheses that there is no significant relationship between manufacturing and service sectors and short term returns (positive or negative) editor@iaeme.com

10 Investor Expectations on Return and Trust on IPO Grading: An Empirical Analysis Table 12 Chi Square Short term return Value Df Asymp. Sig. Exact Sig Exact Sig (1 (2-sided) (2 sided) sided) Pearson Chi-Square Continuity correction Likelihood Ratio Fisher s Exact Test N of Valid Cases 220 *Not Significant at 0.05 and 0.01 significance level It is clear from the Table 13 that among the total sample of 220 shares, 162 (73.6%) shares have given negative return and 58 (26.4 %) shares have given positive return. While considering the shares which belong to service sector, out of 133 shares, 99 (74.4%) shares have given negative return and 34 (25.6%) shares have given positive returns. In manufacturing sector, among the 87 shares, 63 (72.4%) shares have given negative return and 24 (27.6%) shares gave positive returns in the long term. Table 13 Sectors and Long Term Return Sectors Return Total Negative Positive Service 99 (74.4%) 34 (25.6%) 133(100%) Manufacturing 63 (72.4%) 24 (27.6%) 87 (100%) Total 162 (73.6%) 58 (26.4 %) 220 (100%) From Table 14 (Appendix), it is observed that the sectors do not influence long term returns whether positive or negative. Further the results of Chi-square provide the first indication that our hypotheses should support that sectors do not have any influence on long term whether positive or negative. Hence we accept the null hypotheses that there is no significant relationship between manufacturing and service sectors and long term returns (positive or negative). Table 14 Chi Square Long term return Value df Asymp. Exact Sig Exact Sig Sig.(2-sided) (2 sided) (1 sided) Pearson Chi-Square Continuity correction Likelihood Ratio Fisher s Exact Test N of Valid Cases 220 *Not Significant at 0.05 and 0.01 significance level editor@iaeme.com

11 Biju Thomas Muttath and Dr. Assissi Menachery 2.4. Discussion The study intends to find out the relevance of IPO grading on the day of listing, as well as on short term and long term returns. Moreover, the study also brings out the relevance of investing in oversubscribed IPO s on listing day, short term and long term time periods. From the study it is revealed that grading is not an indicator to get profits on short term and long term basis. Only 20.3% and 25.5% of graded shares generated positive return in short term and long term respectively. It is also clear from the study that total of 220 overs subscribed IPO s belong to service and manufacturing sectors has not performing as expected by the investors in short term and long term periods. The study also reveals that shares of medium grade is generating more profit in all three periods, this supports the previous study [22]. The study recommends the investors to invest in service sectors with high grade in order to generate positive return on listing day of the IPOs. In spite of the information asymmetry prevailing in the stock market, retail investors are consciously burning their fingers. Credit rating and grading are the supportive indicators that can be considered for investing but not for a trusted value investing. Probably, focusing on these persistent hot issues and underpricing phenomena, the regulator took lenient step on the mandatory grading. In order to generate return from investment, individuals ought to look into two important qualitative aspects viz, quality of the management and sustainability of the business in the present and future economic scenario. Risk analysis is another important tool by which companies ensure sustainability in future so that investors will be in a position to gain return from the investment. Negative returns in short term and long term periods are evident in the stock market which emphasizes under valuation of shares in the book building process. Moreover it becomes a relevant question that whether companies are conducting adequate risk analysis that involves, risk identification, assessment and mitigation. It is an alarming situation to note that among the total 321 oversubscribed IPOs, only 20.3% and 25.5% of graded shares generated positive return in short term and long term respectively. This calls for immediate action from the SEBI, RBI and relevant statutory and regulatory authorities to take appropriate corrective actions to bring out the governance of Indian companies back into action. Summary 1. There is a significant relationship between grading and listing day returns (positive or negative) at 0.05 significant level. 2. There is no significant relationship between grading and short term returns (positive or negative). 3. There is no significant relationship between grading and long term returns (positive or negative). 4. There is no significant relationship between Manufacturing and Service sectors and listing day returns (positive or negative). 5. There is no significant relationship between manufacturing and service sectors and short term returns (positive or negative). 6. There is no significant relationship between manufacturing and service sectors and long term returns (positive or negative) editor@iaeme.com

12 Investor Expectations on Return and Trust on IPO Grading: An Empirical Analysis 3. FUTURE RESEARCH DIRECTIONS Initial Public Offerings are characterized by phenomena such as hot issue market, under pricing and long term under performance. Researchers considered grading, oversubscribed IPO s and sectors as the variables to explore its influence on return of IPO shares on listing day, shot term and long term returns. Investor heuristic, economic indicators, political, national and international scenarios are few of the other factors which determining the bull and bear rally in the stock market. Influence of these factors on IPO prices, grading and its return at different time periods can also be considered for detailed analysis to explore the philosophy of IPO returns. 4. CONCLUSION & RECOMMENDATIONS The main reason behind companies decision to go public is to raise money and spread the risk of ownership among a large group of shareholders. Reducing debt component in the source fund is another major motive behind IPOs. While going for investing in IPO, informed investors are rich with the information on fundamental aspects of the issuing company. In order to reduce the impact of information asymmetric, SEBI introduced grading mechanism. The Cross tabulation, Chi square and Correlation study reveals that grading is not an indicator to get profits on short term and long term basis. Only 20.3% and 25.5% of graded shares generated positive return in short term and long term respectively. However it is found that 60.6% of the graded IPOs have provided positive return on the listing day. Among this, while considering higher grades 84% has provided positive return on the listing day, whereas in medium grade 53.7% has got positive return and in low grade 50% has got positive return. From this it can be concluded that investing in higher graded IPO is advisable, provided the shares are sold on the first day of the listing. Further the study emphasis the pervasiveness of under-pricing phenomena in book building process of Indian IPO market. We strongly advocate that an investor goes for an IPO offer will be in a position to generate a positive return, if he/ she off load the shares on the first day of listing. The role of grading agencies in awarding various grades is also questionable as the strips graded 3, 4 and 5 failed to meet the expectations of the investors. Trust on grading agencies in awarding 4 and 5 graded shares are also skeptical. We conclude that IPO is a speculation opportunity to make expected return on listing day and grading is not the only parameter investors should rely upon. REFERENCES [1] Josef, Lakonishok, Andrei, Shleifer, Robert, W. Vishney. (1994). Contrarian investment, Extrapolation and Risk, The Journal of Finance, Volume 49, Issue 5,Dec., 1994, [2] Rock, Kevin. (1986). Why new issues are underpriced, Journal of Financial Economics 15: [3] Darrien, Francois and Kent, Womack. (2003). Auctions vs. book building and the control of underpricing in hot IPO markets, Review of Financial Studies 16, [4] Goyal, Vidhan and Lewis & H. K. Tam. (2009). Investor characteristics, relationships, and IPO allocations, HKUST Working Paper. [5] Jitendra, Gala. (2010). Investment strategies for IPOs, Buzzing Stock Publishing House, Mumbai editor@iaeme.com

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