Financial Performance of Saudi Arabian IPO Firms
24 Pages Posted: 26 Oct 2009
Date Written: October, 22 2009
We examine changes in the Saudi listed firms' performance around their initial public offerings. It is found that Saudi IPOs exhibit a sharp decline in the post-IPO performance compared to the pre-IPO period as measured by the ROA and ROS. We also find that the performance deterioration is significantly associated with the IPO event. Surprisingly, the performance decline comes with a significant increase in sales and capital expenditures, which do not support the lack of opportunities theory. Instead Saudi firms' performance decline can be attributed to the owners' desire to cash out as the windows of opportunity theory suggests.
Keywords: Initial public offerings, Firms’ performance, Ownership, Saudi Arabian IPOs Clustering
JEL Classification: G32, G34, M41
Suggested Citation: Suggested Citation