Reason of failure of Initial Public Offers: An empirical Study of Stock Market Experts

Abstract

An Initial Public Offering (IPO) in the Indian stock market could fail for a number of reasons. Since market volatility and investor mood have a significant impact on IPOs, the general state of the market is one potential explanation. Investor caution and reluctance to take part in initial public offerings (IPOs) may result in a lack of demand and possible failure if the market is in a downturn or uncertain period. Poor IPO valuation or pricing could be another factor. Investor disinterest and a lackluster market response may be the result of the offering price being judged by investors to be excessively expensive relative to the company's perceived value. Furthermore, poor financial performance, dim growth prospects, or a lack of a distinct business plan and competitive edge can be factors. Investors look for businesses with solid foundations, room for expansion in the future, and enticing investment opportunities. Investor mistrust and a failing IPO may be the outcomes of ineffective communication of these issues. The success of an IPO can also be impacted by regulatory problems, challenges with company governance, or unfavorable market trends. Any unfavorable event that damages investor confidence or casts doubt on the company's future prospects might result in a failed IPO on the Indian stock market. The researcher had considered 182 stock market experts to know their opinion for the reasons of failure of initial public offers in stock market and concludes that there are number of significant reasons of failure of initial public offers in stock market like Investor caution and unwillingness to take part in IPOs result in lack of demand and possible failure and Poor financial performance, low growth, lack of distinct business plan and competitive edge.