Underpricing of initial public offerings in hot and cold markets: An empirical study on Borsa Istanbul
Underpricing of initial public offerings in hot and cold markets: An empirical study on Borsa Istanbul

Summary/Abstract: Aim: The performance of the initial public offerings is one of the most discussed anomalies in financial literature. The study aims to evaluate the initial public offering performance of Borsa Istanbul companies during the hot and cold periods. The size of the companies, industry concentration and investor optimism are considered in this respect. Design / Research methods: The study covers the 119 IPOs of various sizes from different industries between 2010 and 2017 just after the global financial crisis. The standard event study methodology is applied. This study has revealed the existence of post-crisis underpricing effects in Turkey. Conclusions/findings: The research shows that although low pricing is valid in hot periods, hot and cold markets do not differ significantly from each other in this context. Besides, this study finds that the low price effect exists for small firms, and this effect is more common in hot markets. On the other hand, although there is a relationship between consumer confidence index and low price, no relation with industry concentration was foundOriginality/value of the article: This study has reported the IPO performance in Borsa Istanbul, an important emerging market, after the 2008 crisis, taking into account various market characteristics. This study provides practical results for the capital market players and institutions.Implications of the research: The study will guide Borsa Istanbul’s new companies to have successful public openings and international investors, which pursue market timing along with the financial institutions and policymakersLimitations of the research: Subsequent studies may include variables such as corporate characteristics, financial performance, firm age and region, and corporate governance

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