IPO Underpricing: Financial Vulnerability and Corporate Financial Behavior Disclosure (Jurnal Ilmiah Manajemen dan Bisnis)

Summary

• The research analyzes 268 non-financial public companies listed on the Indonesia Stock Exchange from 2017 to 2025 that experienced IPO underpricing.p.1
• Indonesian IPO volume experienced high fluctuation, increasing from 54 in 2021 to a peak of 79 in 2023, followed by a decline to 41 firms in 2024 and approximately 26 in 2025.p.1
• Across the sample, the average IPO underpricing was 0.356, with values ranging from 0.004 to 0.700.p.6
• Baseline empirical estimations show that Corporate Financial Behavior Disclosure has a statistically significant negative coefficient of -0.125 on underpricing.p.6
• Firm size demonstrates a significant negative impact on underpricing with coefficients ranging from -0.088 to -0.095 across baseline and control models.p.7

Key insights

1. Disclosing management financial behavior and fund allocation in prospectuses lowers information asymmetry and reduces underpricing.p.3
2. Financial vulnerability increases underpricing in baseline models, but its impact becomes negligible when moderating variables are included.p.8
3. Profitability exhibits a positive effect on underpricing, suggesting positive financial results can spark speculative demand and investor overreaction in emerging markets.p.9
4. Larger firm size consistently reduces underpricing because established firms face less uncertainty and demand less price reduction to attract investors.p.9
5. Firm size moderates the negative impact of financial behavior disclosures on underpricing, as reflected by a significant interaction term of -0.045.p.8
6. Profitability amplifies the positive link between financial vulnerability and underpricing, yielding a positive interaction coefficient of 0.088.p.8