This study examines the impact of macroeconomic and firm-specific factors on IPO underpricing in Indonesia, with a particular focus on inflation and the moderating role of underwriter reputation. Drawing from Signal Theory (Spence, 1978), the research investigates whether inflation, firm age, firm size, profitability, and liquidity influence underpricing in IPOs listed on the Indonesia Stock Exchange (IDX) during 2020–2023. The study also tests if underwriter reputation strengthens or weakens these relationships. Using quantitative methods and multiple linear regression analysis, results show that inflation significantly increases underpricing, while firm-specific characteristics such as age, size, profitability, and liquidity have no significant effect. Moreover, underwriter reputation does not moderate the relationship between inflation or firm characteristics and underpricing. These findings suggest that classical signaling mechanisms may have limited explanatory power in the Indonesian IPO context, where investor behavior is likely shaped more by behavioral finance, industry trends, and short-term market dynamics. The study implies the need for a more contextual theoretical model that reflects the characteristics of emerging capital markets. Practically, the study advises investors to evaluate IPOs beyond basic metrics, encourages issuing companies to enhance information disclosure, and calls for regulators such as OJK and IDX to improve market transparency and investor education. Future research should consider alternative variables such as corporate governance, market sentiment, or investor trust to better capture the dynamics of IPO underpricing in Indonesia.
Fahrudin et al. (Wed,) studied this question.