Evaluation of Short-run Market Performance of Initial Public Offerings: Evidence from Karachi Stock Exchange

Abstract

This study analyses short-run underpricing of Initial Public Offering at Karachi Stock Market of Pakistan by applying different event study models. The data were used for the period 2001-2013. The short-run performance of the IPO was evaluated by initial return on first day, yearly return for the first, fifth, tenth and fifteenth days after being listed of a firm and abnormal returns in different states of the economy. For analysis of short-run performance of IPO under different states of economy, data were divided into four states i.e. normal, boom, recession, recovery and general. It was found that IPOs gave positive significant initial return of 182.35%. In normal, boom and general states of economy, it provided significant positive return but in recession and recovery, it was insignificant.