Financial Performance of Saudi Arabian IPO Firms

24 Pages Posted: 26 Oct 2009

See all articles by Ahmed S. Alanazi

Ahmed S. Alanazi

Alfaisal University

Benjamin Liu

Griffith University - Department of Accounting, Finance and Economics

John Forster

Griffith University - Department of Accounting, Finance and Economics

Date Written: October, 22 2009

Abstract

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

Alanazi, Ahmed S. and Liu, Benjamin and Forster, John, Financial Performance of Saudi Arabian IPO Firms (October, 22 2009). Available at SSRN: https://ssrn.com/abstract=1492543 or http://dx.doi.org/10.2139/ssrn.1492543

Ahmed S. Alanazi (Contact Author)

Alfaisal University ( email )

P.O.Box 50927
Riyadh 11533
Riyadh, Riyadh 11533
Saudi Arabia

Benjamin Liu

Griffith University - Department of Accounting, Finance and Economics ( email )

PMB 50
Gold Coast Queensland 9726
Australia

John Forster

Griffith University - Department of Accounting, Finance and Economics ( email )

PMB 50
Gold Coast Queensland 9726
Australia

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