An Analysis of Underpricing Facts and the Factors Affecting the Short Term Performance of Initial Public Offerings in Borsa Istanbul

In this study, the phenomenon of underpricing in the initial public offerings (IPOs) of 183 stocks listed on the Borsa Istanbul (BIST) for the first time between 2010 and 2022/5 is investigated using multiple linear regression analysis and ANOVA analyses to identify the factors affecting short-term performance. In the study it is concluded that there is a positive return on the first trading day and underpricing is made. It is concluded that leverage ratio, asset size, and net proceeds from IPO have a negative effect on underpricing. These findings suggest that the changing risk composition does not explain the high abnormal returns on the first day. It is observed that the first-day and 30-day cumulative abnormal returns do not vary by sector. In our study investigating the presence of a hot issue market, it is found that the initial day returns of firms taking advantage of window of opportunities do not differ from those of firms going public in years with lower IPO volumes. It is concluded that there is a statistically significant relationship between first-day abnormal returns, standard deviation of 30-day cumulative abnormal returns, standard deviation of the index 30 days before the IPO, and liquidity ratio as independent variables and 30-day cumulative abnormal returns. It is observed that the 30-day cumulative abnormal returns of high-risk firms are higher than those of low and medium-risk category firms.