The effect of financial and non-financial factors on short term return of IPOs; Evidence from Tehran Stock Exchange

This paper aims to investigate the short term return of IPOs in Tehran Stock Exchange. Short term return has always been a trending topic among investors and traders all around the world and many studies havebeen done on this interesting topic. At first, we reviewed the most common causes of IPO underpricing and then stated the main ways of IPO pricing. Then, we described variables and research method, which are used in this paper. Observing initial public offerings between the years of 2008 and 2017 and calculating the excess returns of one, three, five days and one month after the IPO day, we tested the determinants of IPOs underpricing. According to the interpretation of cross sectional regressions we found out that two variables have a strong effect on IPOs post 1 month returns. These two are EPS and Industry. In this way, EPS has a positive relation with IPOs short term returns. Furthermore, other variables tested in our regressions have no significant impact on IPOs short term returns.