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Extreme IPO underpricing and the legal environment in wealthy emerging economies

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  • Alanazi, Ahmed S.
  • Al-Zoubi, Haitham A.

Abstract

This paper investigates IPO performance in the wealthy economies of the Gulf countries using restricted access data from regularity bodies. Contrary to asymmetric information theories, we find that IPO performance relies crucially on the unique institutional framework adopted by regulators. We also find that governance regulation in economies with weak regulation tends to provide better protection for investors in IPO markets. Finally, we find that underpricing is more severe when foreign investors are banned from sharing IPOs.

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  • Alanazi, Ahmed S. & Al-Zoubi, Haitham A., 2015. "Extreme IPO underpricing and the legal environment in wealthy emerging economies," Journal of Multinational Financial Management, Elsevier, vol. 31(C), pages 83-103.
    • Handle: RePEc:eee:mulfin:v:31:y:2015:i:c:p:83-103
    DOI: 10.1016/j.mulfin.2015.05.004
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    Cited by:

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    2. Rathnayake, Dilesha Nawadali & Louembé, Pierre Axel & Kassi, Diby François & Sun, Gang & Ning, Ding, 2019. "Are IPOs underpriced or overpriced? Evidence from an emerging market," Research in International Business and Finance, Elsevier, vol. 50(C), pages 171-190.

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    More about this item

    Keywords

    Initial public offerings; Underpricing; Long-run returns; Behavioral finance; GCC;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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