The Percentage of Shares Offered

Oct 13, 2025 by talynt.org 101 views

The Effect of Company Age, Percentage of Shares Offered, Inflation, Underwriter Reputation, and Market Conditions on Shares Underpricing During the Initial Public Offering (IPO) on the Indonesia Stock Exchange (IDX) in 2015-2018

Introduction

The Initial Public Offering (IPO) is a significant milestone for companies seeking funding and public investment opportunities. However, the phenomenon of underpricing, where the initial stock price is set below its fair value, often occurs in an IPO. This study aims to analyze the factors influencing underpricing of IPO shares on the Indonesia Stock Exchange (IDX) during the 2015-2018 period, focusing on:

Company Age: Older companies tend to have a better track record and are easier to predict, minimizing underpricing.
The Percentage of Shares Offered: The proportion of shares offered can affect investor perceptions of the company's potential and their interest in investing.
Inflation: High inflation rates can make investors more cautious, requiring companies to provide greater discounts to attract investors.
Underwriter Reputation: Underwriter reputation in managing IPOs affects investor confidence, with underwriters having a good reputation helping companies set a more fair IPO price.
Market Conditions: Market conditions in general can affect investor interest in IPOs, with bullish markets encouraging companies to offer higher prices.

Research Methodology

This study uses secondary data from the IDX website (www.idx.co.id) and E-Bursa (www.e-bursa.com). Data obtained from 126 companies conducting IPOs on the IDX during the 2015-2018 period were analyzed using the purposive sampling technique. This study involved 105 IPO companies as a sample. Data is processed using the SPSS application version 25.

Research Result

Statistical analysis shows that several factors have a significant influence on underpricing IPO shares on the IDX:

Company Age: The results of the study show that the company's age has a significant effect on underpricing, with a significance value of 0.012. Older companies tend to have a first stock price that is closer to its fair value.
Inflation: High inflation (significance value 0.001) also has a significant effect on underpricing. Inflation conditions encourage companies to offer greater discounts to attract investors.
Underwriter Reputation: Underwriter reputation (significance value 0,000) has a significant effect on underpricing. Underwriters with good reputation can help companies set a fairer, minimizing underpricing.

Conclusion

The results showed that the age of the company, inflation, and underwriter reputation became important factors that affected the underpricing IPO shares on the IDX. Older companies, with low inflation, and choosing underwriters with a good reputation tend to experience lower underpricing.

Recommendation

This research provides several recommendations for companies and stakeholders in the capital market:

Company: The company needs to consider the factors that influence underpricing when planning an IPO, especially the age of the company and inflation. Choosing an underwriter with a good reputation is also very important.
Investors: Investors need to pay attention to the factors that influence underpricing to minimize investment risk.
Regulator: Capital market regulators need to pay attention to the factors that influence underpricing and increase transparency and education of investors so that Indonesian capital markets are healthier and avoid manipulation.

Deeper Analysis

The results of this study provide an important picture of the dynamics of underpricing in the Indonesian capital market. However, further research needs to be done to understand other factors that may have an effect, such as:

Ownership Structure: The concentration of share ownership can affect underpricing IPO shares.
Macroeconomic Conditions: Macroeconomic conditions such as economic growth and interest rates can also affect underpricing.
Capital Market Regulations: Existing capital market regulations can affect underpricing, both positively and negatively.

Development of more comprehensive underpricing prediction models, taking into account these additional factors, can be the next step to improve the quality and efficiency of the Indonesian capital market.

Implications of the Study

The findings of this study have significant implications for companies, investors, and regulators in the Indonesian capital market. Companies need to consider the factors that influence underpricing when planning an IPO, while investors need to pay attention to these factors to minimize investment risk. Regulators need to increase transparency and education of investors to ensure that the Indonesian capital market is healthier and avoids manipulation.

Limitations of the Study

This study has several limitations. The sample size is limited to 105 IPO companies, and the study only focuses on the 2015-2018 period. Further research needs to be done to understand the dynamics of underpricing in the Indonesian capital market over a longer period and with a larger sample size.

Future Research Directions

Future research needs to be done to understand other factors that may have an effect on underpricing, such as ownership structure, macroeconomic conditions, and capital market regulations. Development of more comprehensive underpricing prediction models, taking into account these additional factors, can be the next step to improve the quality and efficiency of the Indonesian capital market.
Frequently Asked Questions (FAQs) About the Effect of Company Age, Percentage of Shares Offered, Inflation, Underwriter Reputation, and Market Conditions on Shares Underpricing During the Initial Public Offering (IPO) on the Indonesia Stock Exchange (IDX) in 2015-2018

Q: What is underpricing in the context of an Initial Public Offering (IPO)?

A: Underpricing refers to the phenomenon where the initial stock price set by a company during an IPO is below its fair value. This can result in investors buying shares at a lower price than their actual worth.

Q: What are the factors that influence underpricing during an IPO?

A: The study found that the following factors have a significant influence on underpricing during an IPO:

Company age: Older companies tend to have a better track record and are easier to predict, minimizing underpricing.
Inflation: High inflation rates can make investors more cautious, requiring companies to provide greater discounts to attract investors.
Underwriter reputation: Underwriter reputation in managing IPOs affects investor confidence, with underwriters having a good reputation helping companies set a more fair IPO price.
Market conditions: Market conditions in general can affect investor interest in IPOs, with bullish markets encouraging companies to offer higher prices.

Q: How does company age affect underpricing?

A: The study found that older companies tend to have a first stock price that is closer to its fair value. This is because older companies have a better track record and are easier to predict, making them less likely to experience underpricing.

Q: What is the significance of underwriter reputation in managing IPOs?

A: Underwriter reputation has a significant effect on underpricing. Underwriters with a good reputation can help companies set a fairer IPO price, minimizing underpricing.

Q: How does inflation affect underpricing?

A: High inflation rates can make investors more cautious, requiring companies to provide greater discounts to attract investors. This can result in underpricing.

Q: What are the implications of the study for companies, investors, and regulators?

A: The study has significant implications for companies, investors, and regulators in the Indonesian capital market. Companies need to consider the factors that influence underpricing when planning an IPO, while investors need to pay attention to these factors to minimize investment risk. Regulators need to increase transparency and education of investors to ensure that the Indonesian capital market is healthier and avoids manipulation.

Q: What are the limitations of the study?

A: The study has several limitations, including a limited sample size and a focus on the 2015-2018 period. Further research needs to be done to understand the dynamics of underpricing in the Indonesian capital market over a longer period and with a larger sample size.

Q: What are the future research directions?

A: Future research needs to be done to understand other factors that may have an effect on underpricing, such as ownership structure, macroeconomic conditions, and capital market regulations. Development of more comprehensive underpricing prediction models, taking into account these additional factors, can be the next step to improve the quality and efficiency of the Indonesian capital market.

Q: What are the practical implications of the study for companies and investors?

A: The study provides practical implications for companies and investors in the Indonesian capital market. Companies need to consider the factors that influence underpricing when planning an IPO, while investors need to pay attention to these factors to minimize investment risk.

Q: How can regulators use the findings of the study to improve the Indonesian capital market?

A: Regulators can use the findings of the study to increase transparency and education of investors, ensuring that the Indonesian capital market is healthier and avoids manipulation.