The Influence of Profitability, Firm Size, and Underwriter Reputation on Underpricing of Technology Sector IPOs in the Indonesia Stock Exchange 2021–2024 (JPIM: Jurnal Penelitian Ilmiah Multidisipliner)

Summary

• Non-primary consumer goods and technology represented the two most active IPO sectors in Indonesia, accounting for 21.8% and 14.6% of total listings respectively.p.2
• Out of a total population of 37 technology sector IPOs on the Indonesia Stock Exchange from 2021 to 2024, a purposive sample of 30 underpriced firms was examined.p.3
• Sampled technology IPOs experienced an average first-day underpricing of 27.09%, ranging from a minimum of 9.33% to a maximum of 35%.p.4
• The multiple linear regression model yielded an R-square of 0.085, indicating that fundamental and reputational variables explained only 8.5% of technology IPO underpricing variance.p.6

Key insights

1. Profitability (ROA) has no statistically significant effect on the level of underpricing in Indonesian technology IPOs (significance of 0.864 and bootstrap significance of 0.804).p.1
2. Company size, measured by natural logarithm of total assets, does not significantly affect IPO underpricing in the technology sector (significance of 0.162 and bootstrap significance of 0.151).p.1
3. Underwriter reputation shows no significant impact on mitigating technology IPO underpricing (significance of 0.431 and bootstrap significance of 0.506).p.1
4. Simultaneously, profitability, firm size, and underwriter reputation have no significant influence on technology IPO underpricing, with an F-test significance of 0.504.p.5
5. Because technology companies operate with asset-light business models and significant intangible assets, traditional balance-sheet size does not fully capture their economic value during IPO valuation.p.6
6. A vast majority (91.5%) of underpricing variance in Indonesian tech IPOs is driven by external market factors, investor sentiment, and offering dynamics outside of firm fundamentals and underwriter prestige.p.6