An analysis of underpricing of initial public offerings, factors affecting short and long-term price performance in Borsa Istanbul

In this study, the phenomenon of underpricing and the factors affecting short-term performance in 183 stocks that were offered to the public for the first time in the BIST between 2010-2022/5 were investigated by multiple linear regression analysis and ANOVA analysis. In addition, in the study, the 3-year long-term performance of the stocks of 106 companies that were offered to the public for the first time between 2010 and 2018 in the BIST, and the effect of firm specific-macroeconomic factors and investor sentiment on long-term returns that affect these performances were investigated by panel data analysis. In the study, it was concluded that there was a positive return on the first trading day and underpricing was made. The highest average abnormal return was seen on the 1st day. Since the 2nd day, a decrease has been observed in the average abnormal returns. While the average abnormal returns were positive in the first 6 days, they took negative values from the 7th day. It is concluded that leverage ratio, assets and net proceeds from public offering have a negative effect on underpricing. These findings show that the changing risk composition cannot explain the high first-day abnormal return. The highest first-day return consists of mining, electricity, gas and water, technology, education, health, sports, construction, transportation and other social services, agriculture, forestry and fisheries, professional scientific and technical activities, administrative and support service activities, wholesale and retail trade sectors that are included in the other sector group. In our study, in which we investigated the existence of the hot issue market, it was concluded that the first day returns of the companies that benefited from the window of opportunities did not differ from those of the companies that made the public offering in years with less public offering volume. It has been concluded that there is a statistically significant relationship between the first-day abnormal returns, the 30-day cumulative abnormal returns, the 30-day index standard deviation before the IPO, and the liquidity ratio independent variables and the 30-day cumulative abnormal returns. It has been observed that the 30-day cumulative abnormal returns of the public offerings in the high risk category are higher than the returns of the companies in the low and medium risk category. In our study, it was concluded that the firm specific factors affecting long-term returns are dividend yield, net profit margin, debt/equity ratio, operating expenses/net sales ratio, net debt growth figures, and asset profitability ratios. It has been observed that changes in GDP, consumer confidence index and gold prices are macroeconomic factors that affect long-term returns. It is concluded that long-term returns are not affected by investor sentiment.