| dc.description.abstract | Underpricing is a condition where the company's offering price is lower than the
closing price in initial public offering. However, according to Rock (1986) in the
winner's curse theory underpricing was deliberately done to attract uninformed
investors. On average underpricing is inherent in going public process but the number
of company making IPOs have never dropped. This study provides three determinant
of underpricing namely, underwriter reputation, use of proceeds and number of risk
factors. This study is aim to examines whether underwriter reputation, use of
proceeds, and number of risk factors affect underpricing in Indonesian stock market
in 2007-2012.
This study uses multiple linier regression analysis to examines the relationship
between variables. The t-test is used to perform whether independent variables affects
dependent variables. The dependent variable is this study is underpricing and the
independent variables are underwriter reputation, use of IPO proceeds, and number of
risk factor
The result shows there is underpricing in first day trading stock. Underwriter
reputation has negative and significant relationship with underpricing and match with
the prediction. Use of proceeds has negative but insignificant relationship with
underpricing and it is in contrast with the prediction, the number of risk factors is
negatively related with underpricing, which is in contrast with the prediction. | en_US |
