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Short Run Underpricing of Initial Public Offering (IPOs) in the Johannesburg Stock Exchange (JSE)

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  • Gillian van Heerden and Paul Alagidede

Abstract

The underpricing of initial public offerings (IPOs) represents one of the anomalies observed in primary markets worldwide, however, the depth and breadth of it varies from country to country, and sector to sector. This study is an empirical analysis of short run performance of IPOs in the Johannesburg StockExchange (JSE). Using data for 138 South African IPOs that were listed on the JSE from 2006 to 2010, we found significant short run underpricing. A sector wise analysis of three broad sectors indicated that the financial sector had the largest IPO underpricing, particularly evident in 2007. The year-wise analysis is also documented.

Suggested Citation

  • Gillian van Heerden and Paul Alagidede, 2013. "Short Run Underpricing of Initial Public Offering (IPOs) in the Johannesburg Stock Exchange (JSE)," Working Papers 344, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:344
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    File URL: http://www.econrsa.org/node/702
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    More about this item

    Keywords

    IPOs; JSE; underpricing; South Africa;

    JEL classification:

    • G0 - Financial Economics - - General
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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