An Empirical Investigation of Short runs IPO underpricing: Evidence from Dhaka Stock Exchange

This paper investigates empirical existence of theories of IPO underpricing in Bangladesh.The study based on IPO listed at Dhaka Stock Exchange (DSE) from 2003 to 2013 analyses Level of IPO underpricing and its determinants.OLS regression is used to distinguish the relationship between various independent variables with dependent variable-level of underpricing.The result reveals that market capitalization, underwriter's reputation, oversubscription rate, offer size, float, ownership retention and method of issue have significant effect on the level of IPO underpricing, whereas size of the firm and offer timing has very little explanatory power.The significant effect of these variables identifies the presence of signaling theory, agency theory, winners curse theory, anchoring theory and impresario hypothesis in IPO pricing where signaling theory is most prominent one in deciding IPO underpricing in Bangladesh.