—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
—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: firstname.lastname@example.org,
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.