Factors influencing IPO investment decision in Nepalese context
Date
2024
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Shanker Dev Campus
Abstract
People with surplus funds have various investment options. They can acquire land,
fixed deposits, savings accounts, and stocks. IPO is one of the investment choices. The
IPO subscription rate has increased in Nepal in recent years. Investing in an IPO is
regarded safe since it is less hazardous than buying shares on the secondary market, and
the return is higher than the secondary market value. The study's objective was to
determine if IPO investors fully understand the company's prospectus and to evaluate
the relationship between prospectus comprehension and stock market experience
(knowledge of IPO). The study used survey and correlation research designs. This study
used purposive convenience sampling to select 380 IPO investors. This study found
that most investors invested wisely, knowing the IPO issuing business, and that few
investors invested blindly, based on rumors. The investment decision and prospectus
review had a strong positive relationship. The study indicated positive relationship
between stock market experience and investment decision. The report advises IPO
investors to invest wisely by reading the prospectus and gathering information about
the company's management team, financial state, and prospects in order to maximize
returns and minimize risk. Investors should listen to their friends/family who are in the
stock market as well as market rumors, but ultimately make their own investment
decisions.
In conclusion, while IPO investment in Nepal is gaining traction due to perceived safety
and potential returns, the study underscores the critical role of prospectus
comprehension in guiding investment decisions. It suggests that investors should
conduct thorough research and due diligence, leveraging both official disclosures and
informal market insights. By empowering investors with knowledge about the IPO
issuing company's fundamentals and market dynamics, the study aims to encourage
prudent decision-making that aligns with long-term financial goals. Ultimately, the
report advocates for a balanced approach where investors integrate formal and informal
sources of information to navigate the complexities of IPO investments effectively.