Evidence of underpricing of initial public offerings in Vietnam

Abstract

This study was conducted to find evidence of short-term underpricing of initial public offerings (IPOs) and factors that explain the level of underpricing based on IPO samples in the period between January 2005 and July 2012 in Vietnam. The authors found certain evidence to support the underpricing, with the underpricing rate set at 38% and 49%. Having bootstrapping regression model employed, the results showed that the two factors ? the exceeding purchase ratio and the starting price of the auctions ? negatively correlated as expected with underpricing rate while impact of market conditions appeared relatively weak. Other factors such as size, listing lateness, company age, state ownership after IPOs did not correlate with the underpricing levels in Vietnam