New Evidence on the Pricing and Performance of Initial Public Offerings in Thailand: 1997–2008
23 Pages Posted: 27 Aug 2009
Date Written: June 17, 2009
This paper examines the pricing and performance of initial public offerings (IPOs) in the Stock Exchange of Thailand (SET) from February 1997 to October 2008. Underpricing is calculated using headline underpricing, underpricing issuer loss, underpricing loss by market value, and underpricing loss by issuer price. The results show that average underpricing of 17.60%, 5.01%, 6.94%, 6.68% and 16.10%, respectively. This is a significantly lower level of underpricing than previously documented in Thailand before the 1997 Asian financial crisis. Post-listing performance is assessed using monthly cumulative abnormal returns, buy-and-hold returns and wealth relatives. The findings show that Thai IPOs generally outperform market benchmarks up to 24 months and underperform thereafter up to 36 months. However, there is much variation in long-run performance among industries. For example, multiple regression analysis shows that IPOs in the financial services industry perform relatively better in the longer run.
Keywords: initial public offerings, underpricing, abnormal returns
JEL Classification: C12, C23, G24, G32
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