Abstract
This study examines the going-public decision of the Initial Public Offerings (IPOs) during hot issue market in Pakistan for the 77 non-financial IPO's firms listed in the Pakistan Stock Exchange (PSX) for a period of 2000-2015. This study also analyses the cyclical patterns of hot and cold issue markets as well as investigates the impact of firm, industry, and country level factors on the going-public decision during hot issue market. This study uses both the volume and initial returns methods to identify the hot and cold issue markets. Using the Logit regression model, we found that the highest number of listing per year along with the high initial returns generally referred to as the hot issue market occurred in the years 2003-2005, 2007 and 2014-2015 whereas the periods between 2000-2002, 2006, and 2008-2013 were found to be cold issue market. Furthermore, the hot issue market exhibited on average a greater degree of under pricing than the cold issues market. The industry as well as the firm-level condition and overall country level factors played an important role in determining firm's going-public decision during hot issue market. The findings of this study support the conventional wisdom of signaling, changing risk composition, information spill-over, and capital demand hypothesis.
Keywords: Hot issue market, cold issue market, going-public decision, IPO, Pakistan