Macroeconomic Factors and Their Influences on Initial Public Offering (IPO) in Nepal

Abstract

The paper examines the influence of macroeconomic variables on the Initial Public Offering (IPO) in the case of Nepal based on the data gathered between the Nepalese fiscal year 1993/94 -2015/16 A.D. The independent variables for the study are gross domestic product, inflation, interest rate, stock market index and remittance. The study used correlation and the multiple regression analysis and found that the impact of these independent variables IPO, which was proxy by the number of IPO, total IPO proceeds raised, and average IPO proceeds raised. The study also found a significant positive relationship of the stock market index and remittance with all the proxies of IPO. Interest rate, however had a negative significant relationship with all of IPO’s proxies. The results indicated that a secondary stock market boom, higher remittance inflow and a decreasing interest rate in the economy, stimulates higher number of firms to go public with higher IPO issue amount.