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Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023

Year 2025, Volume: 75 Issue: 1, 97 - 116, 14.07.2025

Mustafa Özyeşil , Havane Tembelo

https://doi.org/10.26650/ISTJECON2024-1499157

Abstract

This study investigates the short-term pricing anomalies observed in the initial public offerings in Borsa Istanbul during 2023. The raw returns of 39 newly listed firms were initially calculated and benchmarked against the Borsa Istanbul-100 index. To determine abnormal returns, these raw returns were adjusted for market performance over periods of one, three, and seven days post-offering. The statistical significance of these abnormal returns was evaluated using t-statistics at a 5% significance level. The results demonstrate statistically significant pricing anomalies, thereby challenging the market efficiency hypothesis. The presence of these anomalies shows that market participants do not immediately incorporate all available information into IPO pricing. This research contributes to the literature by highlighting the unique dynamics of an emerging market and provides empirical evidence of persistent short-term anomalies in initial public offering pricing in Borsa Istanbul. It underscores the need for enhanced regulatory frameworks to improve market efficiency and offers strategic insights for investors navigating the Turkish IPO market.

JEL Classification : G12 , G14 , G32

Keywords

IPO Pricing anomalies Short-term analysis Borsa Istanbul Stock Exchange Abnormal returns

References

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  • Duong, H. N., Goyal, A., Kallinterakis, V., & Veeraraghavan, M. (2021). Market manipulation rules and iPO underpricing, The Journal of Corporate Finance, 67 (1), https://doi.org/10.1016/j.jcorpfin.2020.101846 google scholar
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  • Katsafados, A. G., LeLedakis, G. N., PYrgiotakis, E. G., AndroutsopouLos, i., ChaLkidis, i., & Fergadiotis, M. (2023). TextuaL information and iPO Underpricing: A Machine Learning Approach, The Journal of Financial Data Science, https://doi.org/10.3905/jfds.2023.1.121 google scholar
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  • Loughran, T., & Ritter, J. R. (2004). Why has iPO underpricing changed over time? Financial Management, 33(3), 5-37. google scholar
  • McdonaLd, J, & Fisher, A.K. (1972). New issue Stock Price Behaviour. Journal of Finance, 27 (1). 97-102 google scholar
  • Mehmood, W., Mohd Rashid, R., & Tajuddin, A. H. (2021). A Review of iPO Underpricing: evidence from DeveLoped, DeveLoping and google scholar
  • Emerging Markets. Journal of Contemporary Issues and Thought, 11(1), 1-19. https://doi.org/10.37134/jcit.voL11.1.2021 google scholar
  • Muscarella, C., J., & Vetsuypens, M., R. (1989). A simple test of Baron's model of IPO underpricing, Journal of Financial Economics, 24 (1), 125-135. google scholar
  • Ranganathan, K., & Veeraraghavan, M. (2023). Pre-and-aftermarket iPO underpricing: Does use of proceeds discLosure matter?, The Journal of Contemporary Accounting & Economics, 19(3), https://doi.org/10.1016/j.jcae.2023.100379. google scholar
  • Tarı, R., (2012). Econometrics. (8th Edition). Umuttepe PubLications. google scholar
  • Ritter, J. R. (1991). The Long-run performance of İnitial pubLic offerings. The Journal of Finance, 46(i), 3-27. https://doi.org/10.111lZj.1540-6261.1991.tb03743.x google scholar
  • Rock, K. (1986). Why new issues are underpriced. Journal of Financial Economics, 15(1-2), 187-212. https://doi.org/10.1016/0304-405X(86) 90054-1 google scholar
  • Salerno, D., Sampagnaro, G., & VerdoLiva, V. (2022). Fintech and iPO underpricing: An explorative study. Finance Research Letters, 44 (1), https://doi.org/10.1016/j.frL.2021.102071 google scholar
  • Zou, G., Cheng, Q., Chen, W., & Meng, J. G. (2020). What causes IPO underpricing? New evidence from China’s SME market. Applied Economics, 52(23), 2493–2507. https://doi.org/10.1080/00036846.2019.1693017 google scholar
  • https://spk.gov.tr/companies/announcements-and-data/issuance-and-ipo-data (Accessed on 04/22/2024) google scholar

Year 2025, Volume: 75 Issue: 1, 97 - 116, 14.07.2025

Mustafa Özyeşil , Havane Tembelo

https://doi.org/10.26650/ISTJECON2024-1499157

Abstract

References

  • AggarwaL, R., LeaL, R., & Hernandez, L. (1993). The aftermarket performance of initial public offerings in Latin America. Financial Management, 22(1), 42-53. https://doi.org/l0.2307/3665964 google scholar
  • AkYoL, A. C., Cooper, T., & Mohapatra, S. (2005). Underpricing and aftermarket performance of iPOs: Evidence from istanbuL Stock Exchange. Applied Financial Economics, 15(10), 735-741. https://doi.org/10.1080/09603100500120046 google scholar
  • Asquith, P., & MuLLins, D. W. (1986). Equity issues And Offering Dilution. Journal of Financial Economics, (15). 61-89. google scholar
  • Chambers, D., & Dimson, E. (2009). iPO Underpricing over the Very Long Run. The Journal of Finance, 64(3), 1407-1443. google scholar
  • Duong, H. N., Goyal, A., Kallinterakis, V., & Veeraraghavan, M. (2021). Market manipulation rules and iPO underpricing, The Journal of Corporate Finance, 67 (1), https://doi.org/10.1016/j.jcorpfin.2020.101846 google scholar
  • Ellul, A., & Pagano, M. (2006). iPO Underpricing and After-Market Liquidity, The Review of Financial Studies, 19 (2), 381-421, doi:10.1093/ rfs/hhj018 google scholar
  • Fama, E. F. (1970). Efficient capitaL markets: A review of theorY and empiricaL work. The Journal of Finance, 25(2), 383-417. google scholar
  • Gao, K., Wang, & M., Liu, J. (2024). Board chair gender, gLass ceiling, and iPO underpricing: Evidence from China, The International Review of Economics & Finance, 92 (1), 1152-1171. https://doi.org/10.1016/j.iref.2024.02.037 google scholar
  • Gupta, V., Singh, S., & Yadav, S. S. (2022). The impact of media sentiments on iPO underpricing, Journal of Asia Business Studies, 16 (5), 786-801. google scholar
  • ibbotson, R. G., & Jaffe, J. F. (1975). “Hot issue” markets. The Journal of Finance, 30(4), 1027-1042. https://doi.org/10.2307/2326721 google scholar
  • Jegadeesh, N., Weinstein, M., & WeLch, i. (1993). An empiricaL investigation of iPO returns and subsequent equitY offerings. Journal of Financial Economics, 34(2), 153-175. https://doi.org/10.1016/0304-405X(93)90051-9 google scholar
  • Katsafados, A. G., LeLedakis, G. N., PYrgiotakis, E. G., AndroutsopouLos, i., ChaLkidis, i., & Fergadiotis, M. (2023). TextuaL information and iPO Underpricing: A Machine Learning Approach, The Journal of Financial Data Science, https://doi.org/10.3905/jfds.2023.1.121 google scholar
  • Ljungqvist, A. (2007). iPO Underpricing, Handbook of Empirical Corporate Finance, Handbooks in Finance, VoL 1, 375-422. google scholar
  • Liu, L. X., Lu, R., Sherman, A. E., & Zhang, Y. (2023). iPO underpricing and Limited attention: Theory and evidence, The Journal of Banking and Finance, 154 (1), https://doi.org/10.1016/j.jbankfin.2023.106932 google scholar
  • Logue, D.E. (1973). On The Pricing of Unseasoned Equityissues: 1965-1969. Journal of Financial and Quantitative Analysis, 8 (1). 91-103. google scholar
  • Loughran, T., & Ritter, J. R. (2004). Why has iPO underpricing changed over time? Financial Management, 33(3), 5-37. google scholar
  • McdonaLd, J, & Fisher, A.K. (1972). New issue Stock Price Behaviour. Journal of Finance, 27 (1). 97-102 google scholar
  • Mehmood, W., Mohd Rashid, R., & Tajuddin, A. H. (2021). A Review of iPO Underpricing: evidence from DeveLoped, DeveLoping and google scholar
  • Emerging Markets. Journal of Contemporary Issues and Thought, 11(1), 1-19. https://doi.org/10.37134/jcit.voL11.1.2021 google scholar
  • Muscarella, C., J., & Vetsuypens, M., R. (1989). A simple test of Baron's model of IPO underpricing, Journal of Financial Economics, 24 (1), 125-135. google scholar
  • Ranganathan, K., & Veeraraghavan, M. (2023). Pre-and-aftermarket iPO underpricing: Does use of proceeds discLosure matter?, The Journal of Contemporary Accounting & Economics, 19(3), https://doi.org/10.1016/j.jcae.2023.100379. google scholar
  • Tarı, R., (2012). Econometrics. (8th Edition). Umuttepe PubLications. google scholar
  • Ritter, J. R. (1991). The Long-run performance of İnitial pubLic offerings. The Journal of Finance, 46(i), 3-27. https://doi.org/10.111lZj.1540-6261.1991.tb03743.x google scholar
  • Rock, K. (1986). Why new issues are underpriced. Journal of Financial Economics, 15(1-2), 187-212. https://doi.org/10.1016/0304-405X(86) 90054-1 google scholar
  • Salerno, D., Sampagnaro, G., & VerdoLiva, V. (2022). Fintech and iPO underpricing: An explorative study. Finance Research Letters, 44 (1), https://doi.org/10.1016/j.frL.2021.102071 google scholar
  • Zou, G., Cheng, Q., Chen, W., & Meng, J. G. (2020). What causes IPO underpricing? New evidence from China’s SME market. Applied Economics, 52(23), 2493–2507. https://doi.org/10.1080/00036846.2019.1693017 google scholar
  • https://spk.gov.tr/companies/announcements-and-data/issuance-and-ipo-data (Accessed on 04/22/2024) google scholar
There are 27 citations in total.

Details

Primary Language English
Subjects Finance
Journal Section Research Article
Authors

Mustafa Özyeşil 0000-0002-4442-7087

Havane Tembelo 0000-0003-3394-4166

Publication Date July 14, 2025
Submission Date June 10, 2024
Acceptance Date February 10, 2025
Published in Issue Year 2025 Volume: 75 Issue: 1

Cite

APA Özyeşil, M., & Tembelo, H. (2025). Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023. İstanbul İktisat Dergisi, 75(1), 97-116. https://doi.org/10.26650/ISTJECON2024-1499157
AMA Özyeşil M, Tembelo H. Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023. İstanbul İktisat Dergisi. July 2025;75(1):97-116. doi:10.26650/ISTJECON2024-1499157
Chicago Özyeşil, Mustafa, and Havane Tembelo. “Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023”. İstanbul İktisat Dergisi 75, no. 1 (July 2025): 97-116. https://doi.org/10.26650/ISTJECON2024-1499157.
EndNote Özyeşil M, Tembelo H (July 1, 2025) Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023. İstanbul İktisat Dergisi 75 1 97–116.
IEEE M. Özyeşil and H. Tembelo, “Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023”, İstanbul İktisat Dergisi, vol. 75, no. 1, pp. 97–116, 2025, doi: 10.26650/ISTJECON2024-1499157.
ISNAD Özyeşil, Mustafa - Tembelo, Havane. “Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023”. İstanbul İktisat Dergisi 75/1 (July 2025), 97-116. https://doi.org/10.26650/ISTJECON2024-1499157.
JAMA Özyeşil M, Tembelo H. Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023. İstanbul İktisat Dergisi. 2025;75:97–116.
MLA Özyeşil, Mustafa and Havane Tembelo. “Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023”. İstanbul İktisat Dergisi, vol. 75, no. 1, 2025, pp. 97-116, doi:10.26650/ISTJECON2024-1499157.
Vancouver Özyeşil M, Tembelo H. Unveiling the Pricing Anomaly: A Detailed Examination of Initial Public Offerings in Borsa Istanbul in 2023. İstanbul İktisat Dergisi. 2025;75(1):97-116.
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