Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan
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...
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| Format: | Article |
| Language: | English |
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National University of Sciences and Technology
2021-01-01
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| Series: | NUST Journal of Social Sciences and Humanities |
| Subjects: | |
| Online Access: | https://www.njssh.nust.edu.pk/index.php/njssh/article/view/14 |
| _version_ | 1797258431035342848 |
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| author | Muhammad Zubair Mumtaz Ather Maqsood Ahmed |
| author_facet | Muhammad Zubair Mumtaz Ather Maqsood Ahmed |
| author_sort | Muhammad Zubair Mumtaz |
| collection | DOAJ |
| description |
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.
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| first_indexed | 2024-03-11T11:57:36Z |
| format | Article |
| id | doaj.art-335bdbfe7bad4df18b3af02ad89ab80e |
| institution | Directory Open Access Journal |
| issn | 2520-503X 2523-0026 |
| language | English |
| last_indexed | 2024-04-24T22:53:25Z |
| publishDate | 2021-01-01 |
| publisher | National University of Sciences and Technology |
| record_format | Article |
| series | NUST Journal of Social Sciences and Humanities |
| spelling | doaj.art-335bdbfe7bad4df18b3af02ad89ab80e2024-03-18T09:13:26ZengNational University of Sciences and TechnologyNUST Journal of Social Sciences and Humanities2520-503X2523-00262021-01-012210.51732/njssh.v2i2.14Long-Run Pricing Performance of Initial Public Offerings (IPOs) in PakistanMuhammad Zubair MumtazAther Maqsood Ahmed 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. https://www.njssh.nust.edu.pk/index.php/njssh/article/view/14Initial Public offeringsUnderperformanceExtreme Bounds Analysis |
| spellingShingle | Muhammad Zubair Mumtaz Ather Maqsood Ahmed Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan NUST Journal of Social Sciences and Humanities Initial Public offerings Underperformance Extreme Bounds Analysis |
| title | Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan |
| title_full | Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan |
| title_fullStr | Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan |
| title_full_unstemmed | Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan |
| title_short | Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan |
| title_sort | long run pricing performance of initial public offerings ipos in pakistan |
| topic | Initial Public offerings Underperformance Extreme Bounds Analysis |
| url | https://www.njssh.nust.edu.pk/index.php/njssh/article/view/14 |
| work_keys_str_mv | AT muhammadzubairmumtaz longrunpricingperformanceofinitialpublicofferingsiposinpakistan AT athermaqsoodahmed longrunpricingperformanceofinitialpublicofferingsiposinpakistan |