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New evidence on the pricing and performance of initial public offerings in Thailand, 1997-2008

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  • Chorruk, Jirapun
  • Worthington, Andrew C.

Abstract

This paper examines the pricing and performance of initial public offerings (IPOs) on the Stock Exchange of Thailand (SET) from 1997 to 2008. Underpricing is calculated using headline underpricing and underpricing issuer loss, loss by market value, and loss by issuer price. The results show underpricing of 17.60%, 5.01%, 6.94%, 6.68% and 16.10%, respectively. This is significantly lower underpricing than documented in Thailand before the 1997 Asian financial crisis. Post-listing performance is assessed using monthly cumulative abnormal returns, buy-and-hold returns, and wealth relatives. The findings show that Thai IPOs generally outperform market benchmarks up to 24 months and underperform thereafter.

Suggested Citation

  • Chorruk, Jirapun & Worthington, Andrew C., 2010. "New evidence on the pricing and performance of initial public offerings in Thailand, 1997-2008," Emerging Markets Review, Elsevier, vol. 11(3), pages 285-299, September.
  • Handle: RePEc:eee:ememar:v:11:y:2010:i:3:p:285-299
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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.
    2. Vithessonthi, Chaiporn, 2014. "What explains the initial return of initial public offerings after the 1997 Asian financial crisis? Evidence from Thailand," Journal of Multinational Financial Management, Elsevier, vol. 27(C), pages 89-113.
    3. Reddy, K. Srinivasa, 2011. "The aftermarket pricing performance of initial public offers: Insights from India," MPRA Paper 62885, University Library of Munich, Germany, revised 2013.
    4. Cumming, Douglas & Zhang, Yelin, 2016. "Alternative investments in emerging markets: A review and new trends," Emerging Markets Review, Elsevier, vol. 29(C), pages 1-23.
    5. 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.

    More about this item

    Keywords

    Initial public offerings Pricing Abnormal returns Stock Exchange of Thailand;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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