Influence of Underwriter Reputation, Firm Size, Profitability, and Offering Size on Indonesia IPO Underpricing

Abstract

This study examines the effect of underwriter reputation, firm size, profitability, and share offering percentage on IPO underpricing in the Indonesia Stock Exchange from 2021 to 2024. Underpricing, where the initial stock price is lower than the secondary market price, remains a frequent phenomenon in Indonesia, attracting attention from investors and issuers. This study addresses the question: How do underwriter reputation, firm size, profitability, and share offering percentage influence IPO underpricing? A quantitative approach is employed using multiple regression analysis on secondary data from companies that have conducted IPOs during the specified period. The results indicate that underwriter reputation has no significant effect on underpricing, whereas firm size, profitability, and share offering percentage hurt underpricing. These findings provide insights for investors in evaluating IPO stock prospects and for companies in designing offering strategies to minimize underpricing. This research contributes to the financial literature and serves as a valuable reference for academics, practitioners, and issuers in understanding the dynamics of the IPO market in Indonesia.