Analysis and forecasting of IPO underpricing. Issue 3 (April 2016)

• Record Type: Journal Article
• Authors: Esfahanipour, Akbar; Goodarzi, Milad; Jahanbin, Reza
• Is Part Of: Neural computing & applications. Volume 27:Issue 3(2016)
• Page Start: 651
• Page End: 658
• Publication Date: 2016-04
• Subjects: Initial Public Offering (IPO) -- Neural network -- Fuzzy regression -- IPO underpricing -- Probability of withdrawal -- Tehran Stock Exchange (TSE); Neural networks (Computer science) -- Periodicals; Neural circuitry -- Periodicals; Artificial intelligence -- Periodicals; Neural Networks (Computer) -- Periodicals; Réseaux neuronaux (Informatique) -- Périodiques; Réseaux nerveux -- Périodiques; Intelligence artificielle -- Périodiques; 006.32
• DOI: 10.1007/s00521-015-1884-1
• Languages: English
• ISSNs: 0941-0643

Abstract

Abstract Probability of withdrawal is a feature of initial public offering (IPOs), which can be an important parameter in decisions of investors and issuers. Considering the probability of offering withdrawal facilitates more precise estimation of underpricing. In this paper, the effective factors on probability of IPO withdrawal and underpricing in Tehran Stock Exchange have been characterized using regression, and then neural network is applied to estimate the probability of IPO withdrawal and underpricing. To evaluate the performance of our applied method, fuzzy regression is employed and compared with neural network. According to the obtained empirical results, neural network demonstrates better accuracy than fuzzy regression. The results indicate that there is a meaningful relationship between underpricing and probability of withdrawal, and the probability of IPO withdrawal plays an important role in precise evaluation of underpricing.