2013-04: IPO financial and operating performance: Evidence from the six countries of the GCC (Working paper)
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Author(s)
Alanazi, Ahmed S.
Liu, Benjamin
Year published
2013
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This paper investigates the financial and operating performance of 52 IPOs made in the GCC region between 2003 and 2010. The results indicate that IPO performance declines after going public. The performance decline is associated with the firm transition from private into public ownership due to increasing agency costs. Also, we find evidence supports the lack of opportunity theory because the firm's growth in sales and capital expenditure is much stronger in the pre-IPO period compared to post-IPO period. Nonetheless, we are unable to rule out the possibility that IPO accounting figures might be inflated in the prospectus ...
View more >This paper investigates the financial and operating performance of 52 IPOs made in the GCC region between 2003 and 2010. The results indicate that IPO performance declines after going public. The performance decline is associated with the firm transition from private into public ownership due to increasing agency costs. Also, we find evidence supports the lack of opportunity theory because the firm's growth in sales and capital expenditure is much stronger in the pre-IPO period compared to post-IPO period. Nonetheless, we are unable to rule out the possibility that IPO accounting figures might be inflated in the prospectus to make the issue attractive for potential investors. This in turn lends support to the window-dressing explanation of IPO performance decline.
View less >
View more >This paper investigates the financial and operating performance of 52 IPOs made in the GCC region between 2003 and 2010. The results indicate that IPO performance declines after going public. The performance decline is associated with the firm transition from private into public ownership due to increasing agency costs. Also, we find evidence supports the lack of opportunity theory because the firm's growth in sales and capital expenditure is much stronger in the pre-IPO period compared to post-IPO period. Nonetheless, we are unable to rule out the possibility that IPO accounting figures might be inflated in the prospectus to make the issue attractive for potential investors. This in turn lends support to the window-dressing explanation of IPO performance decline.
View less >
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Copyright © 2010 by author(s). No part of this paper may be reproduced in any form, or stored in a retrieval system, without prior permission of the author(s).
Note
Finance
Subject
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
G34 - Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Initial public offerings
Gulf Cooperating Council
operating performance
ownership