Journal of Indonesian Economy and Business
Vol 28, No 3 (2013): September

ASYMMETRIC INFORMATION IN THE IPO UNDERWRITING PROCESS ON THE INDONESIA STOCK EXCHANGE: PRICING, INITIAL ALLOCATION, UNDERPRICING, AND PRICE STABILIZATION

Arni Utamaningsih (Politeknik Negeri Padang)
Eduardus Tandelilin (Universitas Gadjah Mada)
Suad Husnan (Universitas Gadjah Mada)
R. Agus Sartono (Universitas Gadjah Mada)

Article Info

Publish Date
02 Sep 2013

Abstract

This study examines the IPO trading based on asymmetric information among heterogeneous investors. An underwriter plays an active role in the process of the IPO where underpricing is a central issue. The underwriter(s) manages the IPO trading by determining the offered price range and a discriminatory treatment between institutional and individual investors. The underwriter prioritizes institutional investors, especially when they show strong buying interests at the time of book building. The results prove that underpricing is higher when the IPO pricing is closer to the upper limit of the price range. We find that underpricing is higher when the allocation of shares to institutional investors is larger.

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Journal Info
Journal of Indonesian Economy and Business
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Abbrev

Publisher

Universitas Gadjah Mada

Subject

Economics, Econometrics & Finance

Description

Journal of Indonesian Economy and Business (JIEB) is open access, peer-reviewed journal whose objectives is to publish original research papers related to the Indonesian economy and business issues. This journal is also dedicated to disseminating the published articles freely for international ...