An Empirical Study on the performance of Short-Run and Long-Run returns of IPOs in India for the Period 2018-2020

Abstract

In this paper, researchers have analysed the short-run and Long - Run Performance of the firms that issued shares to the public for the first time and which are listed in BSE and /or NSE from 2018 - 2020. For analysing short-run performance, the weighted average returns of First Day Return, First Week Return and First Month Return are considered. Research is done for the First and Third Year returns for long-run performance. It was found that IPO Underpricing has a great impact on short as well as long-run performance. Through analysis, the researcher found that the contribution of underpricing is significant on the first day, and then it declines for about 1 month and gets normalised thereafter. Here we find that the Contribution of underpricing goes up for 1 year and 3 years. It rejects many researchers' strong hypothesis that Underpricing contributes more to short-term performance than long-term performance. It is found that the 1^st Day average return on is 15.63% ranging from -54.46% to 130.67 with a standard deviation of 36.2 %. The study has observed that the 3^rd year average return of 123.52 % is the highest among all the 5 periods considered.