Econometric Modeling of Price Formation and Underwriting Services Efficiency in Initial Public Offerings (IPOs) (Ŭzbekiston suġurta bozori.)

Summary

• Empirical analysis shows that initial public offerings on the Uzbekistan stock market experience initial underpricing ranging on average from 12% to 28%.p.3
• Econometric regression demonstrates that hiring professional underwriters with high reputational capital reduces initial equity underpricing by an average of 8,5 percentage points.p.4
• Adopting a book-building issuance mechanism instead of fixed pricing lowers initial IPO underpricing by an average of 6,2 percentage points.p.4
• The study recommends legalizing stabilization mechanisms such as greenshoe options allowing underwriters to manage secondary market price volatility during the first 30–60 days.p.5

Key insights

1. 1. IPO underpricing in emerging markets like Uzbekistan stems primarily from institutional underdevelopment of underwriting and fixed-price mechanisms rather than strategic information signaling.p.3
2. 2. High underwriter reputation and market share exert a negative impact on initial IPO underpricing at a 1% significance level, validating the certification hypothesis.p.4
3. 3. The book-building method captures institutional demand and market expectations, bringing the offer price significantly closer to secondary market equilibrium.p.4
4. 4. Local investment intermediaries in Uzbekistan operate predominantly under best-efforts terms and lack the capital to provide firm-commitment underwriting.p.4
5. 6. Underwriting syndicates comprising domestic and foreign investment banks are necessary to support large-scale state asset privatizations.p.5
6. 7. Establishing an independent underwriter reputation rating system under the National Agency of Perspective Projects is recommended to improve due diligence standards.p.5