The underpricing of IPOs on the stock exchange of Mauritius

Ushad Subadar Agathee; Raja Vinesh Sannassee; Chris Brooks

doi:10.1016/j.ribaf.2012.01.001

The underpricing of IPOs on the stock exchange of Mauritius

Ushad Subadar Agathee
, Raja Vinesh Sannassee
, Chris Brooks

Research output: Contribution to journal › Article (Academic Journal) › peer-review

21 Citations (Scopus)

Abstract

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 to 20 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.

Original language	English
Pages (from-to)	281-303
Number of pages	23
Journal	Research in International Business and Finance
Volume	26
DOIs	https://doi.org/10.1016/j.ribaf.2012.01.001
Publication status	Published - 29 Oct 2012

Keywords

Initial Public Offerings
Underpricing
Ex ante Uncertainty hypothesis
Underwriter Reputation Hypothesis
Stock Exchange of Mauritius

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title = "The underpricing of IPOs on the stock exchange of Mauritius",

abstract = "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 to 20 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.",

keywords = "Initial Public Offerings, Underpricing, Ex ante Uncertainty hypothesis, Underwriter Reputation Hypothesis, Stock Exchange of Mauritius",

author = "Agathee, \{Ushad Subadar\} and Sannassee, \{Raja Vinesh\} and Chris Brooks",

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AU - Agathee, Ushad Subadar

AU - Sannassee, Raja Vinesh

AU - Brooks, Chris

PY - 2012/10/29

Y1 - 2012/10/29

N2 - 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 to 20 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.

AB - 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 to 20 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.

KW - Initial Public Offerings

KW - Underpricing

KW - Ex ante Uncertainty hypothesis

KW - Underwriter Reputation Hypothesis

KW - Stock Exchange of Mauritius

U2 - 10.1016/j.ribaf.2012.01.001

DO - 10.1016/j.ribaf.2012.01.001

M3 - Article (Academic Journal)

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VL - 26

SP - 281

EP - 303

JO - Research in International Business and Finance

JF - Research in International Business and Finance

ER -

The underpricing of IPOs on the stock exchange of Mauritius

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