Performance and capital structure of IPOs in Pakistan from 2000 to 2015

Javid, Attiya Yasmin; Malik, Henna

doi:10.1186/s40854-016-0032-y

Cited by 11 publications

(13 citation statements)

References 62 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…For instance, there is a negative correlation with oversubscription in Pakistan (Mehmood et al, 2020), yet a positive one in Greece (Kenourgios et al, 2007). Mixed results are reported by other studies (Dhamija and Arora, 2017;Hearn, 2014;Javid and Malik, 2016;Omran, 2005;Sahoo and Rajib, 2010;Tran et al, 2013). Regarding information determinants, studies document a positive correlation with the media tone of conveying information in China (Zhang et al, 2020).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 87%

How discounts impact IPOs valuation performance and underpricing? A confrontation between warranted and unwarranted discounts

Tizniti

Aasri

2021

IJFAM

View full text Add to dashboard Cite

Purpose: We investigated the different impacts warranted and unwarranted discounts have on IPOs valuation performance and underpricing. Research methodology: We used multivariate ordinary least squares regression analysis to examine discounts’ determinants, and their impacts on valuation errors and underpricing. We also used bias and accuracy errors to examine valuation performance. Results: We find both final offer price accuracy errors and underpricing negatively related to warranted discounts and positively related to unwarranted discounts. Additionally, warranted discounts are positively related to fair value estimate bias errors, contrarily to unwarranted discounts. Limitations: The relatively small sample size represents our study’s main limitation. Contribution: Unwarranted discounts allow assessing by issuers' underpricing level and underwriters’ sub-optimal efforts and investors' positive returns. Whereas warranted discounts allow issuers to avoid overpricing IPOs and communicate their intrinsic value, investors assess their negative returns, and underwriters reveal their superior qualitative valuation. Regulators can increase after-market efficiency and protect investors by implementing unwarranted discounts’ constraints and warranted discounts’ thresholds.

show abstract

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 87%

How discounts impact IPOs valuation performance and underpricing? A confrontation between warranted and unwarranted discounts

Tizniti

Aasri

2021

IJFAM

View full text Add to dashboard Cite

show abstract

“…In Pakistan's IPO market, IPO issuers are avoiding the risk of losing money on the table, where the issuance of IPOs has decreased continuously. Previous literature examined the initial return phenomena and demonstrated that ex ante uncertainty, market capitalization, information asymmetry, corporate governance, market sentiment, ownership structure, issue size, aftermarket IPOs risk, issue timings, market volatility, pricing mechanism, premium and underwriter reputation are factors that significantly influence initial return (Afza et al, 2013;Aslam and Ullah, 2017;Javid and Malik, 2016;Kayani and Amjad, 2011;Khalid and Raheman, 2009;Mumtaz et al, 2016;Sohail et al, 2018b;Zubair and Ahmed, 2014;Mehmood et al, 2020c).…”

Section: Literature Reviewmentioning

confidence: 99%

Sponsor ownership and IPO initial return: evidence from Pakistan stock exchange

Mehmood

Mohd‐Rashid

Ahmad

et al. 2021

PAR

View full text Add to dashboard Cite

Purpose The purpose of this paper was to examine whether or not the sponsor lock-up ratio, lock-up period, regulation changes and interaction variable (oversubscription [OSR]) affected initial public offering (IPO) initial return. Design/methodology/approach A complete sample of 111 listed IPOs in Pakistan stock exchange from 1996 to 2018 was incorporated. Based on the cross-section data, this paper estimated using ordinary least square and quantile least square for robustness. In addition to that, this paper estimated the data using stepwise least square to inspect the signalling aspect of the lock-up ratio, lock-up period and regulation changes on IPO initial return. Findings This study showed that the lock-up ratio, lock-up period and regulatory changes had a positive impact on the IPO’s initial return. Furthermore, the assertion of interaction variable (regulation changes × OSR) and (lock-up period × OSR) was a negatively significant factor in influencing the IPO’s initial return. The results of this paper were robust to endogeneity bias. Practical implications The finding of this study proposed that sponsors of IPOs can be a strong signal of risk or quality, which was consistent with the signalling theory prediction. Concurrently, investors must be aware of the total proportions of lock-up ratio so that they can estimate the chances of getting the highest initial return on IPOs. From the regulators’ point of view, it is suggested that the lock-up ratio and the lock-up period should be determined with a deeper understanding and incorporated into the equity guidelines as it is evident that these factors are priced by the market. Originality/value Studies on the effect of sponsors have always been centred on well-recognized firms. Therefore, using the IPO samples listed in Pakistan, this paper contributes to the IPO literature by investigating the lock-up ratio of the sponsor, the lock-up period and the regulatory changes to the initial IPO return. Additionally, OSR has been introduced as an interaction variable among the sponsors’ lock-up period and regulations changes to explain the ongoing IPO initial return phenomenon.

show abstract

“…Within the context of Pakistan, past studies concerning initial return issues reported a range of significant determinants, such as offer size and price, firm size, ownership structure, information asymmetry, ex-anti-certainty, market sentiment, aftermarket risk, subscription ratio, size of private firm and government entity, issue timing, and underwriter reputation, market volatility, market capitalisation (Aslam & Ullah, 2017;Javid & Malik, 2016;Kayani & Amjad, 2011;Khalid & Nasr, 2007;Sohail, Bilal, Rukh, & Fatima, 2018b). The Pakistan's security market size, regulatory framework, institutional setting, and efficiency of market differ from those of other developing nations.…”

Section: Introductionmentioning

confidence: 99%

Pricing Mechanism and IPO Initial Return: Evidence from Pakistan Stock Exchange

Mehmood¹,

Mohd‐Rashid²,

Ahmad³

2021

IJBS

View full text Add to dashboard Cite

This study adds to the extent of the literature by examining the impacts of pricing mechanism and premium offered on IPO initial return in Pakistan. Cross-sectional data were gathered using 90 listed IPOs retrieved from Pakistan stock exchange. Accordingly, ordinary least squares, quantile regression, robustness regression, and stepwise regression were employed to assess the factors that influenced initial return. This study describes the intensity of initial return in light of company specific and issue specific variables. Both closing and opening prices to offer price were incorporated to measure the initial return on the initial day of trading. The outcomes showed that after the reform of book building pricing mechanism, the initial return of IPOs increased, when compared to the fixed price offerings in Pakistan. This study concludes that information from book building pricing mechanism and premium had influenced both issuer and investor in subscribing IPO.

show abstract

Performance and capital structure of IPOs in Pakistan from 2000 to 2015

Cited by 11 publications

References 62 publications

How discounts impact IPOs valuation performance and underpricing? A confrontation between warranted and unwarranted discounts

How discounts impact IPOs valuation performance and underpricing? A confrontation between warranted and unwarranted discounts

Sponsor ownership and IPO initial return: evidence from Pakistan stock exchange

Pricing Mechanism and IPO Initial Return: Evidence from Pakistan Stock Exchange

Contact Info

Product

Resources

About