The aim of the Research
is to find the factors affecting withdrawal of IPOs in India from 2001-2016.
The research is going to focus on Financial, Technology, Energy, Utilities and
Communication Industries. Dunbar and Foerster, in 2006, have explained a few determinants of IPO
withdrawals in USA.
This thesis intends to extend it to the Indian market.
Many Companies have
been seen to not follow through IPOs which have been filed and incurred costs.
The reasons for the failure of the company to go from private to public are
uncertain. Even though a few studies have been made on US and German Markets, further
analysis of other markets, especially emerging markets is required and is expected
to bring a new breakthrough to the field. Studies have shown that under-pricing,
negative news, reputation of underwriter impacts the IPOs. Uncertainty about
the investors and the amounts they are willing to pay causes under-pricing of IPOs
and this is considered one of the major reasons for withdrawals. In this research, we will analyse both the
market and firm characteristics and determine the major elements which the
other studies haven’t looked upon. With this study we aim to demonstrate that the
evidence from US and other developed markets cannot be adapted to emerging marketsSN1 .
Why do some companies withdraw IPOs that has already been filed for?
This research will find out the determinants of Withdrawn IPOs from 2001
to 2016. This study is limited to the Indian Market and will consider 30
different variables that are related to the issuing of an IPO in 5 different industries.
These industries are basically Financial, Technology, Energy, Communication and
Utilities. The 30 different variables are classified under various categories
like Economic Environment of the country, Legal environment, Market
environment, Offer Characteristics, Firm characteristics and Corporate
RATIONALE AND CONTRIBUTION
The switch from Private to Public is a important
event in the lifecycle of a company as issuing IPOs helps the company raise capital
and provide liquidity to the existing shareholders. There are immense growth opportunities
related to the IPOs and a lot of companies try to tap on to the opportunity. It
is interesting to note that not all IPOs are followed through, some are
withdrawn before issuing. The prevalence of such a phenomenon have been examined
by a few researchers. Studies by Dunbar and Busaba (1998), Benveniste and Guo
(2001) have shown that almost one in every 5 IPOs were withdrawn during 1980s
and 1990s. Further studies have suggested that this number has increased to one
in every 2 IPOsSN2 SN3 .
This thesis extends the study of the existing
literature to Indian market and find the determinants for withdrawal. Unfavourable
market conditions and poor investor sentiments are mainly being touted as the
factors by the Indian market. But an elaborate study on the Indian IPO market
may bring out the real factors involved. Market experts have been saying that
the weak secondary market conditions and losses in previously listed IPOs take
a toll on the investor sentiments.
In this study, we are considering 30 variables that
we feel affects IPO, including market and firm characteristics, in 5 different industries.
choice of Topic
IPOs are considered to be a very significant event
of the lifecycle of the Company. Once a company becomes Public it is open to a
multitude of investors. Entering into the primary market is quite a task for a company,
however big or small, as there is a lot of ambiguity regarding the value and
functioning of the company in the open. Investors do not have a lot of
information available. This area has attracted a lot of studies and research.
It is surprising to note that even then a lot has not been researched on the
phenomena of IPO withdrawal. Many cases of IPO withdrawals have been registered
in India, there has been very little research in this area.
Many companies argue
that bad market conditions cause the withdrawal of IPOs. But studies in US and other
developed markets state otherwise. This thesis will look into almost 30
variables that may or may not affect the IPO so as to come to a conclusion to
see what factors affect this phenomenon.
of the research
With the increasing significance of equity markets,
a comprehensive study of IPOs is the need of the hour. While studies have been conducted
on some developed countries, the developing nations need to be analysed. This
thesis will increase the knowledge of IPOs in the emerging markets. This will
help the issuers find the true market price and take informed decisions and
avoid future withdrawals.
and 30 factors needs to be mentioned
ipo market and the industries you are considering needs to be explained