This paper undertakes a rigorous empirical analysis of the underpricing and long-run performance of initial public offerings (IPOs) listed on the Tehran Stock Exchange. In this context, the underpricing behavior is systematically compared based on industry sector and corporate ownership structure. Subsequently, employing OLS regression models, seven distinct empirical specifications are meticulously designed and estimated in a progressive, stepwise manner. These models comprise a baseline specification, an earnings-management effect model, the core research framework, an extended model incorporating a state-ownership variable, a state-ownership moderation effect model, and two robustness-test models utilizing alternative proxy indicators for earnings management.
The statistical population of this study encompasses all firms that conducted IPOs on the TSE, with the sample period spanning initial public offerings from 2011 through 2023. An initial inspection of the data revealed that underpricing is more pronounced in manufacturing and extractive enterprises relative to their service and financial counterparts, and is marginally higher, on average, in state-owned firms compared to non-state-owned entities.
The results demonstrate that offering type, earnings management, firm size, profitability, cash ratio, asset growth, long-term holding period returns, and the specific year of the IPO rank among the most critical determinants of IPO underpricing. Conversely, sales growth and the current ratio did not yield statistically significant coefficients across the majority of the estimated models. Furthermore, the findings indicate that state ownership, in isolation, does not exert a direct impact on underpricing; however, through its interaction effect, it significantly moderates the relationship between earnings management and IPO underpricing.