International Journal of Commerce and Management Research

International Journal of Commerce and Management Research






ISSN: 2455-1627


International Journal of Commerce and Management Research
International Journal of Commerce and Management Research
Vol. 2, Issue 6 (2016)

The pre & post-issue performance of IPO banks


Dr. Seema Mishra Upadhyay

This paper analyzes the performance of banks that went public in the year 2010 for a sample of two public sector banks in India. (Punjab and Sind bank and United bank of India). This study is done from the period of 5 years before going public (pre issue performance) and after five years of public (post issue performance). Various ratios have been taken to assess the performance of banks. Results show that there is a decline in the post-issue operating performance of IPO banks. Moreover, the change in return on assets after the IPO is unrelated to the level of profitability prior to the IPO. In the presented study, profitability ratios in the year before initial public offering increase over the previous year, and then, after the IPO, fall. The changes in the return on assets after going public seem to be explained, to a large extent, by the institutional characteristics of the financial systems, such as bank activity restrictiveness and regulatory requirements regarding the amount of capital. This confirms the phenomenon of distorting the level of profit before the IPO and partially equity dilution after the IPO.
Pages : 22-25 | 1674 Views | 741 Downloads
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