Initial public offering (IPO) price Short-term Overreaction: The Effect of price and other factors in Tehran Stock Exchange

Initial public offering of shares (IPO) and short-term abnormal returns compared to other shares, has been accounted by numerous studies worldwide. Studies indicate that short-term returns rather than Initial stock offering and also long-term returns less than market return.Partial reaction to some short-term phenomena due to asymmetric information among decision maker did not match as well as the appropriate response to the economic phenomena. One of the basic assumptions of behavioral finance is overreaction that the main cause of such behavior on investors is representativeness heuristics. In this study, the initial overreaction over Tehran stock Exchange has been approved by the cumulative average returns(CAR) and buy and hold(B&H) method and the results confirm that the influence of price on the overreaction.Lower(higher) price leads to higher (lower) return and thus to overreaction.