Abstract
This study examines the determinants of underpricing of Initial Public Offerings (IPOs) using Extreme Bounds Analysis (EBA) in the Pakistani capital market. We measure the short-run performance of 75 IPOs from listing to the thirtieth-trading day issued on Karachi Stock Exchange from 2000 to 2011. The results confirm that IPOs have been underpriced from the first to thirtieth-trading day indicating that Pakistani IPOs outperformed over the sample period. Under EBA technique, eleven determining variables of IPO underpricing are investigated. With aftermarket risk of the IPO and oversubscription as the free variables, nine variables are selected as the variable of interest in combination with three other variables. We found that after market risk of an IPO, oversubscription, offer price and financial leverage are the true factors influencing IPO underpricing.

Muhammad Zubair Mumtaz, Ather Maqsood Ahmed. (2014) Determinants of Underpricing of Initial Public Offerings: Evidence from Pakistan, , Volume-06, Issue-1.
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