The Impact of Underwriter on IPO Pricing: Evidence From Pakistan

Abstract

The present study has conducted to analyze the impact of underwriter reputation on IPO Underpricing in Pakistan, does the underwriter reputation has any impact on it or not. for this purpose, we have taken all the IPOs issued in year 2000-2019, the total number of IPOs issued in the time period under consideration is 115 whereas after scrutiny the data has been reduced to 88 IPOs. These were further divided into two categories of Financial and non-financial firms, as these have different financial, operating and risk characteristics (Boubaker et al., 2018). The number of the Non- Financial firm IPOs in the final data have come to 59 and Financial firm IPOs is 29. Statistical analysis techniques of Descriptive analysis, Correlation Analysis and Regression analysis were used. It is found that underwriter reputation has a positive and significant impact on IPO underpricing in both Financial and Non-Financial firms. The data used in present study is one developing economy of Pakistan, one can investigate validity of used models in cross country analysis in future. This study will guide all the company executives seeking financing via IPO to understand the factors affecting the process and issue successful IPOs