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The underpricing of IPOs on the Stock Exchange of Mauritius

Listed author(s):
  • Agathee, Ushad Subadar
  • Sannassee, Raja Vinesh
  • Brooks, Chris

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 10–20%. 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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0275531912000025
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Article provided by Elsevier in its journal Research in International Business and Finance.

Volume (Year): 26 (2012)
Issue (Month): 2 ()
Pages: 281-303

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Handle: RePEc:eee:riibaf:v:26:y:2012:i:2:p:281-303
DOI: 10.1016/j.ribaf.2012.01.001
Contact details of provider: Web page: http://www.elsevier.com/locate/ribaf

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