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The long-run performance of IPOs: the case of the Stock Exchange of Mauritius

Agathee, U. S., Sannassee, R. V. and Brooks, C. (2014) The long-run performance of IPOs: the case of the Stock Exchange of Mauritius. Applied Financial Economics, 24 (17). pp. 1123-1145. ISSN 0960-3107

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To link to this item DOI: 10.1080/09603107.2014.924294

Abstract/Summary

This study examines the long-run performance of initial public offerings on the Stock Exchange of Mauritius (SEM). The results show that the 3-year equally weighted cumulative adjusted returns average −16.5%. The magnitude of this underperformance is consistent with most reported studies in different developed and emerging markets. Based on multivariate regression models, firms with small issues and higher ex ante financial strength seem on average to experience greater long-run underperformance, supporting the divergence of opinion and overreaction hypotheses. On the other hand, Mauritian firms do not on average time their offerings to lower cost of capital and as such, there seems to be limited support for the windows of opportunity hypothesis.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > ICMA Centre
ID Code:38409
Uncontrolled Keywords:initial public offerings, underpricing, ex ante uncertainty hypothesis, underwriter reputation hypothesis, Stock Exchange of Mauritius,
Publisher:Taylor and Francis

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