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Explaining underpricing of IPOs in frontier markets: Evidence from the Nigeria Stock Exchange

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  • Adjasi, Charles K.D.
  • Osei, Kofi A.
  • Fiawoyife, Eme U.
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    Abstract

    The paper provides empirical analyses of IPO underpricing on the Nigerian Stock Exchange, from the period 1990 to 2006. The results indicate an average abnormal initial day returns of 43.1%. There is evidence of long-run underperformance of 0.6%. Results from our regression model explaining initial abnormal returns for the IPOs of Nigeria show that size of firm and audit quality are important variables affecting underpricing. The results also show the presence of a non-linear relationship between the offer price and underpricing.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0275531911000079
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    Bibliographic Info

    Article provided by Elsevier in its journal Research in International Business and Finance.

    Volume (Year): 25 (2011)
    Issue (Month): 3 (September)
    Pages: 255-265

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    Handle: RePEc:eee:riibaf:v:25:y:2011:i:3:p:255-265

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    Web page: http://www.elsevier.com/locate/ribaf

    Related research

    Keywords: Underpricing IPO Abnormal returns Stock market Uncertainty Africa;

    References

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    17. Michael T. Cliff & David J. Denis, 2004. "Do Initial Public Offering Firms Purchase Analyst Coverage with Underpricing?," Journal of Finance, American Finance Association, vol. 59(6), pages 2871-2901, December.
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    Cited by:
    1. Agathee, Ushad Subadar & Sannassee, Raja Vinesh & Brooks, Chris, 2012. "The underpricing of IPOs on the Stock Exchange of Mauritius," Research in International Business and Finance, Elsevier, vol. 26(2), pages 281-303.

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