1Research Scholar, Assistant Professor, National Institute of Construction Management and Research (NICMAR), Near Farmagudi Circle Bus Stop, Farmagudi, Ponda, Goa, 403 401
2Advisor, Goa Industrial Development Corporation, Plot No. 13-A-2, EDC Complex, Patto Plaza, Panjim, Goa, 403 001
JEL Classification: G12, G14, G15, G18
Significant listing day returns for IPOs is a phenomenon that is observed when companies go public. Using a larger time frame (2007–2014) we attempt to determine the extent to which IPO grading has impacted the first-day marginally adjusted return on opening (MAARO) and the extent to which individual grades impact MAARO. The results indicate that grading helped increase pricing efficiency and reduced opening day returns. We fail to reject the null hypothesis that the level of underpricing for the individual grades or a combination of grades reduces with better grades. Our results are mixed compared to a study by Poudyal (2008) who finds that securities with higher IPO grades tend to exhibit under-pricing to a lesser extent.
Initial Public Offerings, Grading, Underpricing, NSE, MAARO, Bookbuilt
