The Post-issue Market Performance of Initial Public Offerings: Empirical Evidence from the Malaysian Stock Markets

2018 ◽  
Vol 17 (3_suppl) ◽  
pp. S376-S414 ◽  
Author(s):  
Nurwahida Yaakub ◽  
Mohamed Sherif ◽  
Roszaini Haniffa
Keyword(s):  
Initial Public Offerings ◽  
Jel Classification ◽  
Consumer Products ◽  
Calendar Time ◽  
Monthly Data ◽  
Public Offerings ◽  
Industrial Sectors ◽  
Long Run ◽  
Construction Property ◽  
Wide Range

This study examines the long-run performance of the initial public offerings (IPOs) listed in the Malaysian main and alternative ‘Access, Certainty and Efficiency’ (ACE) markets at the economic and sectorial levels. Using event- and calendar-time study methods and monthly data from January 2000 to December 2011, we provide novel evidence on the existence of under performance anomaly in the Malaysian markets and more intensely in the ACE markets. We demonstrate robust evidence on the distinction in sector-specific characteristics from the aggregate market characteristics. While the consumer products and industrial sectors dominate the overall underperformance, the construction, property and technology sectors significantly overperform. The findings are robust to a wide range of other sensitivity checks including parametric and non-parametric tests. JEL Classification: G14, G15, G30, G34, G32, G38

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.

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.

The Desire to Acquire and IPO Long-Run Underperformance

2012 ◽  
Vol 47 (3) ◽  
pp. 493-510 ◽  
Author(s):  
James C. Brau ◽  
Robert B. Couch ◽  
Ninon K. Sutton
Keyword(s):  
Initial Public Offerings ◽  
Calendar Time ◽  
Cross Sectional ◽  
Going Public ◽  
Public Firms ◽  
Public Offerings ◽  
Long Run ◽  
The Mean ◽  
Time Frames ◽  
The Impact

AbstractWe analyze 3,547 initial public offerings (IPOs) from 1985 through 2003 to determine the impact of acquisition activity on long-run stock performance. The results show that IPOs that acquire within a year of going public significantly underperform for 1- through 5-year holding periods following the 1st year, whereas nonacquiring IPOs do not significantly underperform over these time frames. For example, the mean 3-year style-adjusted abnormal return is – 15.6% for acquirers and 5.9% for nonacquirers. Our cross-sectional and calendar-time results suggest that the acquisition activity of newly public firms plays an important and previously unrecognized role in the long-run underperformance of IPOs.

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.

The Rationale for IPO Lockup Agreements: Agency or Signaling?

2012 ◽  
Vol 15 (03) ◽  
pp. 1250013 ◽  
Author(s):  
Fei Gao ◽  
Mazhar A. Siddiqi
Keyword(s):  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Agency Costs ◽  
Control Agency ◽  
Public Offerings ◽  
Long Run ◽  
Lockup Period

Most Initial Public Offerings (IPOs) feature share lockup agreements, which prohibit insiders and other pre-IPO shareholders from selling their shares for a specified period of time following IPO. We explore possible reasons why some IPO firms voluntarily agree to have a much longer lockup period than other firms. We find evidence that lockup agreements are used to control agency costs. Longer lockups are significantly related to inferior long-run returns and this relationship is stronger for firms that have less reputable underwriters. We find no evidence that lockup agreements are used to signal firm quality and we are unable to relate firm quality, as measured by long-run returns, to information asymmetry variables.

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