Performance of Cross-listed and Local IPOs: Evidence from Alternative Investment Market

Abdul Wahid; Shahzad Ahmad Khan; Muhammad Zubair Mumtaz

doi:10.22547/BER/11.3.1

Authors

Abdul Wahid Phd Scholar & Faculty of Management Sciences, Riphah International University, Islamabad. Author
Shahzad Ahmad Khan Faculty of Management Sciences, Riphah International University, Islamabad. Author
Muhammad Zubair Mumtaz Assistant Professor at School of Social Sciences and Humanities, National University of Science and Technology (NUST), Islamabad. Author

DOI:

https://doi.org/10.22547/BER/11.3.1

Keywords:

Short-run Performance, Robust Regression, Cross-listed IPOs, Local IPOs, Alternative Investment Market.

Abstract

This paper examines the short-run pricing performance of 238 IPOs listed on the Alternative Investment Market (hereafter referred as AIM) during the period from 2007 to 2016. This study measures the short-run pricing behavior of IPOs over the period of first-thirty trading days and finds that IPOs are underpriced by 12.58% on the first trading day which dilutes to 7.57% on the thirtieth trading day. We also report that the level of short-run pricing performance of newly listed IPOs is higher than cross-listed IPOs as these issues may have more uncertainty which results to generate higher abnormal returns. The results also confirm the evidence of investors’ sentiment, underwriters’ prestige, and signaling hypothesis. In addition, most of the proxies related to ex-ante uncertainty are not robust predictors of short-run performance of cross-listed IPOs.