Three Essays on Initial Public Offerings in Emerging Markets: Evidence from the Six Countries of the Gulf Cooperation Council

Abstract

This thesis investigates initial public offerings (IPOs) in the Gulf Cooperation Council (GCC) region between 2003 and 2010. The GCC is a political and economic organization which comprises six Gulf countries: Saudi Arabia, Kuwait, Qatar, Bahrain, the United Arab Emirates and Oman. A large number of companies in the GCC have gone public over the last decade. There are three essays in this thesis. The first essay examines the financial and operating performance of 52 IPOs (using accounting-based measures). It compares and contrasts the performance of IPOs between the pre- and post-IPO periods. In addition, the first essay investigates the reasons for change in performance between the two periods. The contributions of this essay are three fold. Firstly, this is the first study to examine the operating performance of a sample of IPOs from the GCC region. Secondly, a new technique is used to examine the operating performance of IPOs by employing a model that is based on panel data. Thirdly, several theories are discussed and explanations are provided for the change in performance of IPOs in the GCC. The findings in this essay indicate that the operating performance of IPOs in the GCC declines after going public, and this finding is consistent with pre-existing IPO literature. The deterioration in performance among these IPOs begins in the year of going public and intensifies in magnitude in subsequent years. Moreover, this essay suggests that the change in ownership structure is the main reason for the decline in IPO performance. Nonetheless, the results also lend support to other theories, such as lack of opportunity and “window-dressing”.