Does Risk Factor Disclosure Influence Underpricing? Evidence from Indonesia IPOS

Shofiyyah Saleh; I Nyoman Nugraha Ardana Putra; Siti Sofiyah Abdul Mannan

doi:10.55927/eajmr.v4i11.465

Authors

Shofiyyah Saleh Universitas Mataram
I Nyoman Nugraha Ardana Putra Universitas Mataram
Siti Sofiyah Abdul Mannan Universitas Mataram

DOI:

https://doi.org/10.55927/eajmr.v4i11.465

Keywords:

Underpricing, Initial Public Offering (IPO), Disclosure of Factors Risk, Information Asymmetry, Prospectus

Abstract

This study analyzes the effect of risk factor disclosure in the prospectus on the underpricing rate of IPO shares in Indonesia. With a quantitative approach, this explanatory study analyzed 142 samples of companies that conducted IPOs on the Indonesia Stock Exchange for the 2022-2024 period. The results of multiple linear regression analysis based on cross-sectional data showed that the disclosure of business risks and general risks did not have a significant effect on underpricing. On the other hand, investment risk disclosure has a significant negative effect, while the age of the company has a significant positive effect. However, the regression model has a low Adjusted R² value indicating the weak ability of the risk variable to explain the underpricing variation. It is concluded that the disclosure of risk factors in the prospectus has not served effectively as a signal to reduce information asymmetry and affect the underpricing of IPOs in Indonesia.

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