scholarly journals Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan

2021 ◽  
Vol 2 (2) ◽  
pp. 97-140
Author(s):  
Muhammad Zubair Mumtaz ◽  
Ather Maqsood Ahmed
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Activity Period ◽  
Risk Level ◽  
Calendar Time ◽  
Public Offerings ◽  
Explanatory Variables ◽  
Ipo Performance ◽  
Long Run

This study investigates the long-run pricing performance of 90 IPOs listed on the Karachi Stock Exchange from 1995 to 2010. This study finds evidence that IPOs show signs of underpricing and underperform over three years after listing; however, the observed pattern of underperformance is not always statistically significant. The equal-weighted buy-and-hold abnormal returns and calendar-time analysis confirm the significance of the IPO underperformance over the three year period after listing on the exchange. Extreme bounds analysis is used to test the sensitivity and robustness of twenty six explanatory variables in determining the IPO underperformance. The results reveal that the robust predictors of IPO underperformance include underpricing, financial leverage, age of the firm and oversubscription for buy-and-hold return calculations and underpricing, hot activity period, post issue promoters’ holding, issue proceeds and aftermarket risk level for cumulative abnormal return calculations. Moreover, the fads hypothesis and the window of opportunity hypothesis are applied to explain long-run IPO performance.

scholarly journals The Aftermarket Performance of Initial Public Offerings in Pakistan

2016 ◽  
Vol 21 (1) ◽  
pp. 23-68
Author(s):  
Muhammad Zubair Mumtaz ◽  
Zachary A. Smith ◽  
Ather Maqsood Ahmed
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Activity Period ◽  
Risk Level ◽  
Public Offerings ◽  
Explanatory Variables ◽  
Market Sentiment ◽  
Long Run

This paper estimates the aftermarket performance of initial public offerings (IPOs) listed on the Karachi Stock Exchange. The evidence confirms that IPOs generate statistically significant abnormal returns in the short run, which indicates that underwriters initially underprice IPOs when analyzed using a short time horizon. However, when using longer time horizons to estimate abnormal performance, the results indicate that IPOs underperform in the long-run. There is an apparent dislocation between the initial valuation set by underwriters and the premium paid by the market for these new issues. The market sentiment that causes this temporary disequilibrium eventually fades and the market reprices the newly issued shares. We conduct an extreme bounds analysis to test the sensitivity and robustness of 16 explanatory variables in determining the long-term performance of unseasoned newly issued shares. The results indicate that the long-term investment ratio, industry affiliation, market-adjusted abnormal returns, financial leverage, return on assets, IPO activity period, the aftermarket risk level of unseasoned issues, and the post-issue promoter’s holdings variables significantly affect IPOs’ aftermarket performance. Theoretically, the overreaction hypothesis, ex-ante uncertainty hypothesis and window-of-opportunity hypothesis best explain IPOs’ aftermarket performance in this study.

Performance of IPOs of Indian Companies Backed by Private Equity

2019 ◽  
Vol 23 (4) ◽  
pp. 397-409
Author(s):  
Till Drebinger ◽  
Shailendra Kumar Rai ◽  
Heiko Hinrichs
Keyword(s):  
Initial Public Offerings ◽  
Private Equity ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Public Offerings ◽  
Ipo Performance ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
Short Run ◽  
The Impact

We examine 616 Indian initial public offerings (IPOs), including 116 IPOs backed by private equity (PE), between 2000 and 2016, to test whether PE-backed IPOs perform better than non-PE-backed IPOs in the short run as well as in the long run in terms of cumulative abnormal returns (CARs). We also examine the impact of the PE firm nationality on post-IPO performance. Consistent with the existing literature, we find underperformance for all IPOs, on an average, within 1 year. However, PE-backed IPOs have lower degree of underperformance than non-PE-backed IPOs. We also find that size, liquidity and leverage have a positive impact on the post-IPO performance after the financial crisis, whereas issue amount and capital issue year are negatively correlated to CARs before and during the crisis. We also find significant effects of PE firm nationality on CAR development. IPOs backed by India-dedicated PE firms perform best, while those backed by foreign PE firms perform worst and even underperform non-PE-backed IPOs. IPOs by foreign PE firms perform better if they co-invest with India-dedicated PE firms.

A Study on Factors Influencing the Initial Public Offerings (IPO) in the Bombay Stock Exchange (BSE), India

2016 ◽  
Vol 3 (1) ◽  
pp. 22-35
Author(s):  
Rajesh C. Jampala ◽  
P. Adi Lakshmi ◽  
Srinivasa Rao Dokku
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Public Offerings ◽  
Ipo Performance ◽  
Factors Influencing ◽  
Long Run ◽  
The Face ◽  
Market Capitalisation

This study has examined the IPO performance in India from 2007 to 2013. Results show that under-pricing exists in the first day of trading during the particular period, but results show that the degree of under-pricing is dramatically decreased in comparison with what is shown in previous studies. The study finds that the IPOs are influenced by its issue variables. The face value of the shares and oversubscription subscription of the share are highly affected factor for underpriced in initial day of listing. After 36 months of listing the IPOs are underperformed by 29.06 percent and market capitalisation of the firm, issue premium of the share, face value of the share, issue price, and oversubscription of IPOs are highly influencing IPOs performance in long run. The study has considered 146 companies for identifying the factors influencing the Initial Public Offerings (IPO) in the Bombay Stock Exchange (BSE), India.

scholarly journals Apakah Kinerja Jangka Panjang Penawaran Umum Perdana Di Indonesia Underperformed?

2018 ◽  
Vol 21 (1) ◽  
pp. 1
Author(s):  
Suherman .
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Calendar Time ◽  
Public Offerings ◽  
Long Run ◽  
Abnormal Performance ◽  
Financial Firm ◽  
Three Factor

The objective of this research is to investigate the long-run performance of Indonesian Initial Public Offerings (IPOs). Sample of this research covers 101 IPO firms between 1999 and 2005 listed on Jakarta Stock Exchange. Sample is categorized into panel A (all IPOs sample), panel B (non-financial firm IPOs), panel C (non-privatized IPOs) and panel D (privatized IPOs).The results show that insignificant underperformance is found for EWCAR and VWCAR (except privatized IPOs showing insignificant outperformance), significant underperformance is found for EWBHAR (except privatized IPOs showing outperformance, although insignificant), and significant outperformance is found for VWBHAR (except privatized IPOs showing insignificant outperformance). The underperformance disappears, however, when calendar-time approach is utilized. The intercepts in Fama-French three-factor regressions are insignificantly different from zero, suggesting no abnormal performance.

Long-Run IPO Performance Analysis of German and Spanish Family-Owned Businesses

2005 ◽  
Vol 18 (3) ◽  
pp. 179-202 ◽  
Author(s):  
Peter Jaskiewicz ◽  
Víctor M. González ◽  
Susana Menéndez ◽  
Dirk Schiereck
Keyword(s):  
Stock Market ◽  
Initial Public Offerings ◽  
Family Involvement ◽  
Positive Impact ◽  
Market Performance ◽  
Abnormal Returns ◽  
Negative Influence ◽  
Ipo Performance ◽  
Long Run ◽  
Stock Market Performance

This article examines the long-run stock market performance of German and Spanish initial public offerings (IPOs) between 1990 and 2000. We distinguish between family-and nonfamily-owned business IPOs by using the power subscale of the F-PEC. Buy-and-hold-abnormal returns (BHAR) are calculated in order to determine abnormal returns. Our results show that three years after going public, investors, on average, realized an abnormal return of − 32.8% for German and − 36.7% for Spanish IPOs. In both countries, nonfamily business IPOs perform insignificantly better. Regression analyses show that for the whole sample there is a positive company size effect. In family-owned businesses, strong family involvement has a positive impact on the long-run stock market performance, whereas the age of the firm has a negative influence.

scholarly journals An Empirical Analysis for Abnormal Returns from Initial Public Offerings (IPOs): evidence of Iranian oil and chemical industries

2013 ◽  
Vol 3 (1) ◽  
pp. 143 ◽  
Author(s):  
Mahdi Filsaraei ◽  
Alireza Azarberahman ◽  
Jalal Azarberahman
Keyword(s):  
Initial Public Offerings ◽  
Capital Market ◽  
Abnormal Return ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Going Public ◽  
Significance Level ◽  
Public Offerings ◽  
Positive Abnormal Return ◽  
Chemical Companies

Purpose: The core purpose of this paper empirically study of the initial public offerings (IPOs) of companies accepted in oil and chemical industries. The paper attempts to answer the question of is there any abnormal return from IPOs in listed companies in Tehran Stock Exchange (TSE).Design/methodology/approach: This research is an applied research, and its design is empirical, which is done by the method of post-event (past information). For the purpose of the study the t-statistic, regression and variance analyses are applied to examine the hypotheses. We use in the analyses a sample of 29 newly accepted Iranian oil and chemical companies listed on TSE for the period of 2001 to 2012. This paper has studied abnormal return and three abnormal phenomena have been considered in capital market. These phenomena consist: (1) underpricing or overpricing of the firm's stock, (2) lower or higher stock return of the firms and (3) Particular period in market for stock transactions volume.Findings: The results support the hypothesis that there is a positive abnormal return to investing in the newly accepted oil and chemical firms for stockholders. It also shown the firm size is the only factor that can affect the stock abnormal return. With considering significance level, investors have to give attention sequentially to other variables such as stock ownership centralization, going public time and stock offering volume.

scholarly journals The Berlin Stock Exchange in Imperial Germany: A Market for New Technology?

2016 ◽  
Vol 106 (11) ◽  
pp. 3558-3576 ◽  
Author(s):  
Sibylle Lehmann-Hasemeyer ◽  
Jochen Streb
Keyword(s):  
Initial Public Offerings ◽  
Industrial Revolution ◽  
Stock Exchange ◽  
New Technology ◽  
Going Public ◽  
Public Offerings ◽  
Imperial Germany ◽  
Long Run ◽  
Innovative Firms ◽  
Surprising Fact

Analyzing 474 cases of firms going public in the German capital between 1892 and 1913, we show that innovative firms could rely on the Berlin stock market as a source of financing. Our data also reveal that initial public offerings (IPO) of innovative firms were characterized by particularly low underpricing, comparatively high first trading prices, and no long-run underperformance. We interpret these empirical results as evidence for the surprising fact that in the period of the Second Industrial Revolution the Berlin stock exchange was already a well-functioning market for new technology. (JEL G14, N23)

The long-run performance of SME IPOs in India: empirical evidence from Indian stock market

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nischay Arora ◽  
Balwinder Singh
Keyword(s):  
Initial Public Offerings ◽  
Small And Medium Enterprises ◽  
Abnormal Returns ◽  
Least Square ◽  
Calendar Time ◽  
Content Type ◽  
Event Time ◽  
Long Run ◽  
Ordinary Least Square Regression ◽  
Medium Enterprises

Purpose The purpose of this paper is to study the pattern of long-run performance of small and medium enterprises (SMEs) initial public offerings (IPOs) and examine the firm- and issue-related determinants of long-run performance of SME IPOs in India. Design/methodology/approach The 3 6, 9 and 12 months share returns of Indian SME IPOs is studied using event time methodologies, i.e. buy and hold returns, cumulative abnormal returns and wealth relatives on a sample of 375 SME IPOs issued during February 2012 to May 2018. Additionally, ordinary least square regression has been used to investigate the determinants of long-run performance of SME IPOs on a reduced sample of 104 because of non-availability of price observations. Findings The findings reveal that Indian SME IPOs exhibit long-run overperformance contradicting the international evidences of underperformance, and this overperformance is significantly evident using buy and hold abnormal return (BHAR). Furthermore, based on the divergence of opinion hypothesis, fads theory and windows of opportunity hypothesis, the results reveal that on one hand, issue size and oversubscription negatively affect BHAR, while on the other hand, auditor reputation, underwriter reputation, hot market, underpricing, inverse of issue price, profits prior to listing positively affect long-run performance. However, firm age, firm size, debt equity ratio, volatility and long-run performance computed through BHAR lacks significant relationship. Research limitations/implications The study relied on event time methodology of measuring aftermarket performance of one year because of the limited availability of price offerings. Hence, the study could be extended to analyze aftermarket returns over a period of three to five years to enable reaching the vivid conclusions. Calendar time methodology may also be used to compute abnormal returns. Practical implications The results based on the study provides an implication to the investors by providing them an opportunity to bank higher long-run returns by engaging in active and timely trading strategies. Nevertheless, the results also show that investors should be cautioned while taking investment decisions. Originality/value The study contributes to rising body of international literature by analyzing the larger and recent sample of IPOs issued from 2012 to 2018 listed on SME exchange.

scholarly journals Explanatory Power of Pre-Issue Financial Strength for Long-Term Market Performance: Evidence From Initial Equity Offerings on an Emerging Market

2019 ◽  
Vol 7 (1) ◽  
pp. 16
Author(s):  
Leszek Czapiewski ◽  
Joanna Lizińska
Keyword(s):  
Initial Public Offerings ◽  
Factor Model ◽  
Emerging Market ◽  
Explanatory Power ◽  
Equity Offerings ◽  
Calendar Time ◽  
Developed Country ◽  
Public Offerings ◽  
Long Run

This study tests possible sources of long-term risk-adjusted returns on initial public offerings (IPO) in Poland under the calendar-time portfolio (CTP) approach. The moment of going public still remains a puzzle in many areas. Poland’s status as an emerging market has been indisputable for many years, though improvements in capital market infrastructure have led to its recent reclassification as a developed country. It is an important European equity market. Thus, research on IPO pricing explanation for Poland is important for both investors and academics. In this study, we estimate risk premiums and run regressions on four asset pricing models, including the latest innovation, which is the Fama-French 5-factor model. We also check the robustness. The research documents the existence of the long-run underperformance for Polish IPOs independently of the specification of the calendar-time portfolio approach as alphas range from -9.6% to -13.2% annually. We show that the underperformance is mainly driven by IPOs in a position of weak pre-issue financial health. More profitable IPOs experience less negative long-term returns and the underperformance is even absent in some specifications.

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