The Effect of Underwriter Reputation, Financial Leverage and Profitability on the Underpricing of IPO Shares on the IDX (Jurnal Riset Keuangan Dan Akuntansi)

Summary

• The research used a saturated sample of 41 companies that conducted an initial public offering on the IDX during 2024.p.3
• Underwriter reputation showed a negative coefficient of -3.442 and a significance value of 0.025, confirming a negative and significant effect on underpricing.p.6
• Financial leverage recorded a positive coefficient of 5.143 and a significance value of 0.007, demonstrating a positive and significant effect on stock underpricing.p.6
• Profitability yielded a coefficient of -5.081 with a significance value of 0.160, indicating no significant effect on underpricing.p.6

Key insights

1. Underwriter reputation has a negative and significant effect on IPO stock underpricing on the Indonesia Stock Exchange.p.1
2. Financial leverage has a positive and significant effect on stock underpricing, as higher corporate debt increases investor risk and price discount expectations.p.6
3. Company profitability measured by ROA does not significantly affect the degree of IPO stock underpricing.p.7
4. Underpricing dominated the 2024 IDX IPO market, affecting 37 out of 41 listing companies or 90.2%.p.5
5. Only 13 out of 41 listing companies (34.1%) selected underwriters categorized among the 20 Most Active IDX Members by Trading Frequency in 2024.p.5
6. Reputable underwriters reduce uncertainty by establishing initial offer prices closer to fair value.p.6