Valuation of Fixed Price Offers: An IPO Perspective

This paper investigates the pricing of 72 fixed price IPOs issued in India during 2002-2008. The results indicate that industry composite P/E ratio significantly and positively influences both the offer price and list price. The paper lends support to the view that fixed price IPOs issued during high activity period command higher prices than the IPOs issued during low activity period. IPO characteristics, like book value, return on net worth, and insider retention also have significant and positive contribution in evaluating IPO price. However, the age of the IPO firm is found to be inversely associated with price. Subscription rate is also found to be positively associated with list price.