• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
    • Frequency: Quarterly
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
    • Executive Editor: Ms. Fiona Chu
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HOME > Archive > 2015 > Volume 3 Number 8 (Aug. 2015) >
JOEBM 2015 Vol.3(8): 802-806 ISSN: 2301-3567
DOI: 10.7763/JOEBM.2015.V3.289

Determinants of Underpricing in Indonesian Stock Market

Tatang Ary Gumanti, Nurhayati, and Yeni Maulidia

Abstract—The purpose of this study is twofold. First, it examines the degree of underpricing in Indonesian initial public offering (IPO). Second, it examinesthe determinants of underpricing by focusing on three non-financial information, namely underwriter reputation, use of proceeds, and number of risk factors. Those three non-financial information serve as a signal concerning the quality of an IPO. A sample of 63 firms making IPO in Indonesian stock market from 2007 to 2012 is examined. The results show that Indonesian IPO firms on average are underpriced. Underwriter reputation has negative and significant relationship with the level of underpricing. Number of risk factorsis negatively related tothe degree of underpricing.

Index Terms—IPO underpricing, risk factors, underwriter reputation, use of proceeds.

The authors are with the Department of Management, Faculty of Economics, University of Jember Indonesia (e-mail: tatangag@yahoo.com, nur1963@yahoo.com, ye_chin@ymail.com).

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Cite: Tatang Ary Gumanti, Nurhayati, and Yeni Maulidia, "Determinants of Underpricing in Indonesian Stock Market," Journal of Economics, Business and Management vol. 3, no. 8, pp. 802-806, 2015.

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