The Effects of Fear Sentiment on Covid-19 on IPO Underpricing Moderated by Government Intervention

Rahadian Abby Putra () and Arief Wibisono Lubis
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Rahadian Abby Putra: Fakultas Ekonomika dan Bisnis, Universitas Indonesia, Magister Manajemen
Arief Wibisono Lubis: Fakultas Ekonomika dan Bisnis, Universitas Indonesia, Magister Manajemen

A chapter in Proceedings of the 7th Global Conference on Business, Management, and Entrepreneurship (GCBME 2022), 2024, pp 72-82 from Springer

Abstract: Abstract Underpricing is a phenomenon that often occurs when companies conduct IPOs. One of the factors that influence the occurrence of underpricing is investor sentiment. The current condition where there is a Covid-19 pandemic causes a sentiment of fear in investors. This level of fear can be reduced by reducing the spread of Covid-19. This study was conducted to find out the relationship between the sentiment of fear over Covid-19 and the level of underpricing in companies carrying out IPOs with government intervention as a moderating variable. This study uses a causal study approach and simple regression (ordinary least squares) as methods to analyze the data. The sample used in this study was 91 companies that carried out IPOs in 2020 and 2021 in the Indonesian capital market. The results of this study indicate that the sentiment of fear over Covid-19 has a significant positive relationship with the level of underpricing. Government intervention as a moderating variable increases the negative effect of fear sentiment over Covid-19 on the level of underpricing. It is expected the results of this study could contribute to the literature related to underpricing, and can be used as input for companies that will carry out IPOs.

Keywords: Covid-19; Government Intervention; Investor Sentiment; Underpricing; Stock Market (search for similar items in EconPapers)
Date: 2024
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DOI: 10.2991/978-94-6463-234-7_9

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