The performance and the survivorship of New Zealand IPOs
ABSTRACT This paper studies the performance and the survivorship of New Zealand IPOs for the period 1991 to 2005. We find that the commonly reported features of IPOs, such as underpricing and underperformance, exist in New Zealand, with the level of underpricing declining in recent years. We find that the operating performance of companies in our sample does not change significantly after listing. Underpricing, size and operating performance are found to influence IPO market performance, while higher risk and new start-up companies have lower operating performance after listing. In relation to survivorship, the majority of delisted firms are merger and acquisition targets rather than failed firms. Interestingly, acquired firms have better market performance and have been operating longer than the surviving firms, while failed firms tend to have higher market volatility, change their management more often, and be issued in the hot market periods.
SourceAvailable from: Faisal Alqahtani[Show abstract] [Hide abstract]
ABSTRACT: Abstract Purpose – The purpose of this paper is to explore the extent of underpricing in the Saudi Arabian market of initial public offerings (IPOs) and whether the sharia-compliance would have a significant impact on the initial returns. Design/methodology/approach – a comprehensive sample of 72 IPOs in Saudi Arabia between 2004 and September 2010 is used to analyse the initial return after adjusting it to the market movement as well as controlling for some common factors. Findings – We find that underpricing not only occurs but is also among the highest levels in the world. While traditional factors affecting initial return include age, market timing and firm size, we find that Sharia compliance significantly reduces underpricing in Saudi Arabia. This may imply that Sharia compliance helps to reduce the uncertainty and consequences of the limited information inherent in initial public offerings. Research limitations/implications – Further research is needed to see if the effect of Sharia compliance status on the short-run performance of IPOs extends to other Islamic countries or is a country-specific characteristic. More firms need to be examined to identify the market characteristics that drive the returns Originality – This paper is among the first to provide an empirical evidence of the impact of Sharia compliance on the initial return pattern in IPO market. Keywords – Islamic finance, initial public offerings, Stock returns, Market performance, Saudi Arabia. Paper type – Research paper.
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ABSTRACT: The study of the effects of delisting on the dynamics of value and governance of delisted companies represents a very promising research opportunity for international scholars. This paper addresses a preliminary question, i.e. how, in the face of a complex phenomenon with a significant number of highly differentiating characteristics, it is possible to avoid the risk that a conjunct observation of operations that differ too much one from the other might raise significant obstacles to the application of the main models of qualitative and/or quantitative analysis. We define a classification framework that deepens the fundamental distinction between voluntary and involuntary delistings. A particular focus is on voluntary delistings, which we differentiate in the light of three main characterising features: i) the subjects who pursue delisting, ii) the underlying strategic context and iii) the operating conditions of the delisted company. Our three-dimensional classification framework defines eight homogeneous areas of observation (pre-sale delistings, hidden potential delistings, control strengthening delistings and takeover delistings, either in balanced operating conditions or in presence of crisis/operating distress) and may be a useful starting point for future studies on the effects of delisting on the dynamics of value and governance of the delisted company.