Factors Affecting Investor Decisions on Initial Public Offering in Nepal

The paper examines the factors affecting investors’ decisions on initial public offerings with reference to Pokhara, Nepal. The five predictive variables—management quality, company goodwill, company performance, firm’s industry, and market information— have been included in the study. The primary data was collected from a field survey using a structured questionnaire from 223 respondents. Descriptive (demographic and perception-related information) and inferential statistics (correlation) were used for analysis. We find that company goodwill, company performance, firm’s industry, management quality, and market information affect investors’ IPO decisions. The legitimacy of the company, key shareholders profile, founder and CEO of the company, prestige of the board members, company’s financial position and historical background, return on equity, earnings per share, capital gains, and existing market share affect investors’ IPO decisions. Most investors select IPOs of finance, microfinance, and insurance companies as primary investment areas. These findings provide important information for companies and regulators in their assessment of investor demand and disclosure of information.