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The underpricing of IPOs on the stock exchange of Mauritius

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Agathee, U. S., Sannassee, R. V. and Brooks, C. (2012) The underpricing of IPOs on the stock exchange of Mauritius. Research in International Business and Finance, 26. pp. 281-303. ISSN 0275-5319

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To link to this article DOI: 10.1016/j.ribaf.2012.01.001

Abstract/Summary

This paper investigates the underpricing of IPOs on the Stock Exchange of Mauritius (SEM). Taking into account the whole population of firms which went public since the inception of the SEM until 2010, the results show an average degree of underpricing within the range 10 to 20%. Using a regression approach, we demonstrate that the aftermarket risk level and auditor's reputation both have a significant positive impact on initial returns. We propose the use of the Z-score as a composite measure of a firm's ex ante financial strength, and find that it has a significant negative effect on the degree of short-run underpricing.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > ICMA Centre
ID Code:26244
Uncontrolled Keywords:Initial Public Offerings, Underpricing; Ex ante Uncertainty hypothesis; Underwriter Reputation Hypothesis; Stock Exchange of Mauritius
Publisher:Elsevier

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