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IPO Behavior in Gcc Countries: Goody-Two Shoes or Bad-To-The-Bone?

Penned By Abdullah Al-Hassan
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IPO Behavior in Gcc Countries: Goody-Two Shoes or Bad-To-The-Bone?

Penned By Abdullah Al-Hassan
4.85 32,504 Ratings
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Editor's Note:
This paper documents the phenomenon of underpricing initial public offerings (IPOs) for 47 firms that went public between 2001 and 2006 in the equity markets of the six Gulf Cooperation Council (GCC) countries. The average initial abnormal returns of 290 percent exceed those found in the existing literature for both developed and emerging markets IPOs. Although the IPOs' returns over the one-year horizon beat the market index benchmark, they present negative abnormal returns once initial returns are excluded, which is consistent with findings in other industrial and emerging markets. The empirical models reject the hypothesis that the IPOs' performance is driven by the common independent variables employed in the literature. On the contrary, in the case of the GCC, country- and industry-specific characteristics, in addition to the timing of the offers, play key roles in explaining the abnormal returns of IPOs. This paper's empirical findings support the hypothesis that investors initially tend to be over-optimistic about the performance of IPOs, but grow more pessimistic over time.

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Length 36 Pages
Imprint International Monetary Fund
Released July 1, 2007
Identifier (ISBN) 16928239
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Abdullah Al-Hassan
The Mind Behind the Work
Abdullah Al-Hassan

Abdullah Al-Hassan writes contemporary fiction and has always been fascinated by character-driven stories. They hold a degree in English Literature and previously worked as an editor before transitioning to writing their own books. Abdullah Al-Hassan lives with their spouse and a very vocal rescue cat.

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