Market Capitalization of the Company

Oct 13, 2025 by talynt.org 32 views

Analysis of Shares Underpricing Levels at the Time of the Inaugural Public Offering on the Indonesia Stock Exchange

Introduction

The phenomenon of underpricing or stock determination under market value at the time of the initial public offering (IPO) is a fascinating topic on the Indonesia Stock Exchange. This study aims to analyze the effect of several factors on the level of underpricing IPO shares on the Indonesia Stock Exchange for the 2010-2014 period. The main objective of this study is to reveal the effect of several variables, namely Number of shares offered, Emission size, Market Capitalization of the Company, and Profitability on the level of underpricing. Additionally, this study wants to know the partial effect of each of these variables on the level of underpricing.

Literature Review

The concept of underpricing has been extensively studied in the literature. Underpricing refers to the situation where the IPO stock price is set lower than its market value. This phenomenon has been observed in various stock exchanges around the world, including the Indonesia Stock Exchange. Several studies have attempted to explain the causes of underpricing, including the size of the emissions, market uncertainty, and the risk level of the company.

Methodology

This study uses secondary data from 76 companies that conduct IPOs on the Indonesia Stock Exchange for the 2010-2014 period. The sampling technique used is purposive sampling, while the analytical method used is multiple regression. The data collected includes the number of shares offered, emission size, market capitalization of the company, and profitability.

Results

The results of the analysis show that of all the variables tested, only the size of the emissions has a significant effect on the level of underpricing. Together, all variables influence the level of underpricing. The results indicate that companies with larger emissions tend to set IPO stock prices lower than their market value.

Discussion

The results of this study indicate that emission size is a dominant factor that affects the level of underpricing. This shows that companies with larger emissions tend to set IPO stock prices lower than their market value. Several factors might be the cause of this phenomenon, including:

Higher risk: Companies with greater emissions generally require greater funds, so they are willing to set lower stock prices to attract investors.
Market uncertainty: Companies with larger emissions generally operate in a more volatile sector, so investors are more careful and want lower stock prices as collateral.
More aggressive underpricing strategies: Companies with larger emissions may be more aggressive in implementing underpricing strategies to attract investors and create high market interest.

Implications

The results of this study have implications for various parties, including:

Issuer: Considering the right underpricing strategy by considering the size of emissions and market conditions.
Investor: Understanding the factors that influence the level of underpricing to make wiser investment decisions.
Regulator: Arrange and oversee the implementation of IPOs to ensure transparency and justice for all parties.

Limitations

This research has several limitations, including:

Limited data used: This research only uses data from companies that conduct IPOs on the Indonesia Stock Exchange for the 2010-2014 period.
Limited analyzed variables: This research only analyzes the effect of certain variables, while many other variables may affect the level of underpricing.

Conclusion

This study provides valuable insights into the phenomenon of underpricing on the Indonesia Stock Exchange. The results of this study indicate that emission size is a dominant factor that affects the level of underpricing. This study also highlights the importance of considering the size of emissions and market conditions when implementing underpricing strategies.

Recommendations for Future Research

Further research can be done by expanding data coverage, increasing the analyzed variables, and considering the influence of other factors such as macroeconomic conditions and capital market regulations.

References

[List of references]

Appendices

[List of appendices]

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Frequently Asked Questions (FAQs) about Analysis of Shares Underpricing Levels at the Time of the Inaugural Public Offering on the Indonesia Stock Exchange

Q: What is underpricing in the context of initial public offerings (IPOs)?

A: Underpricing refers to the situation where the IPO stock price is set lower than its market value. This phenomenon has been observed in various stock exchanges around the world, including the Indonesia Stock Exchange.

Q: What are the causes of underpricing in IPOs?

A: Several factors might be the cause of underpricing, including:

Higher risk: Companies with greater emissions generally require greater funds, so they are willing to set lower stock prices to attract investors.
Market uncertainty: Companies with larger emissions generally operate in a more volatile sector, so investors are more careful and want lower stock prices as collateral.
More aggressive underpricing strategies: Companies with larger emissions may be more aggressive in implementing underpricing strategies to attract investors and create high market interest.

Q: What is the significance of emission size in underpricing?

A: The results of this study indicate that emission size is a dominant factor that affects the level of underpricing. This shows that companies with larger emissions tend to set IPO stock prices lower than their market value.

Q: What are the implications of underpricing for issuers, investors, and regulators?

A: The results of this study have implications for various parties, including:

Issuer: Considering the right underpricing strategy by considering the size of emissions and market conditions.
Investor: Understanding the factors that influence the level of underpricing to make wiser investment decisions.
Regulator: Arrange and oversee the implementation of IPOs to ensure transparency and justice for all parties.

Q: What are the limitations of this study?

A: This research has several limitations, including:

Limited data used: This research only uses data from companies that conduct IPOs on the Indonesia Stock Exchange for the 2010-2014 period.
Limited analyzed variables: This research only analyzes the effect of certain variables, while many other variables may affect the level of underpricing.

Q: What are the recommendations for future research?

A: Further research can be done by expanding data coverage, increasing the analyzed variables, and considering the influence of other factors such as macroeconomic conditions and capital market regulations.

Q: What are the practical implications of this study for the Indonesia Stock Exchange?

A: The results of this study can be used to improve the IPO process on the Indonesia Stock Exchange by considering the size of emissions and market conditions when implementing underpricing strategies.

Q: What are the potential benefits of underpricing for companies and investors?

A: Underpricing can be beneficial for companies and investors by attracting more investors and creating high market interest. However, it is essential to consider the potential risks and limitations of underpricing.

Q: What are the potential risks of underpricing for companies and investors?

A: Underpricing can be risky for companies and investors if it leads to a decrease in stock price over time. It is essential to carefully consider the factors that influence underpricing and to implement strategies to mitigate potential risks.

Q: What are the potential implications of underpricing for the overall economy?

A: Underpricing can have implications for the overall economy by affecting the flow of capital and the allocation of resources. It is essential to carefully consider the potential effects of underpricing on the economy and to implement policies to mitigate potential risks.