Long Run Price Performance of IPO Stocks in Bangladesh

Journal of Finance and Banking, Volume 9, Number 2, December 2011

23 Pages Posted: 13 Aug 2012 Last revised: 24 Aug 2012

See all articles by Mohammad Sadiqul Islam

Mohammad Sadiqul Islam

University of Dhaka - Department of Finance

Mahfuja Malik

Boston University; Sacred Heart University

Mohammad Riaz Uddin

Marshall University - Lewis College of Business

Date Written: December 31, 2011

Abstract

This study was conducted to analyze the short and long run price performance of IPOs in Bangladesh. Based on a sample of 163 IPOs that were issued during the period between 1992 and 2006, this study documents short run out-performance and long run underperformance of IPOs in the secondary market. The short run out-performance of IPOs peaks in the first month of trading in the secondary market. In the long run IPOs under perform the industry and the market in general. But the underperformance to industry is much severe than underperformance to market. Further analyses reveal that the long run underperformance is much higher for IPOs issued in few years, particularly the hot issue periods. IPOs belonging to Leather, Engineering, Paper, Ceramic and Food industries underperform their respective industry and the market severely in the long run. On the other hand, IPOs belonging to Banking and Non-bank Financial Institutions industries outperformed the industry and the market significantly.

Keywords: IPO, Stock Return, Primary Market, Price Performance

Suggested Citation

Islam, Mohammad Sadiqul and Malik, Mahfuja and Uddin, Mohammad Riaz, Long Run Price Performance of IPO Stocks in Bangladesh (December 31, 2011). Journal of Finance and Banking, Volume 9, Number 2, December 2011, Available at SSRN: https://ssrn.com/abstract=2128522

Mohammad Sadiqul Islam (Contact Author)

University of Dhaka - Department of Finance ( email )

Department of Finance
University of Dhaka
Dhaka, 1000
Bangladesh

Mahfuja Malik

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Sacred Heart University ( email )

5151 Park Ave
Fairfield, CT 06432
United States

Mohammad Riaz Uddin

Marshall University - Lewis College of Business ( email )

400 Hal Greer Boulevard
Huntington, WV 25755
United States

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