Trends Initial Public Offerings (IPOS) In Saudi Arabia

Dr. Umara Noreen, Shouroq Alzenaidy, Rawan Alsabi, Zaheer Ahmed, Trends Initial Public Offerings (IPOS) In Saudi Arabia, International Journal of Empirical Finance and Management Sciences 03(2020):07-29

23 Pages Posted: 18 Nov 2021

See all articles by Editor IJEFMS

Editor IJEFMS

affiliation not provided to SSRN

Umara Noreen

Prince Sultan University

Date Written: March 31, 2020

Abstract

Positive trends in Initial Public Offerings (IPOs) are indicative of the economy’s performance and health of the financial markets. The objective of this research is to study and analyze the IPO trends in Saudi Arabia. Both qualitative and quantitative methods were used for data collection including interviews & survey. Five structured interviews were conducted with Finance professional (with indirect or direct exposure) of Saudi Arabian capital market. It was revealed that the economic factors and the market sentiment play the most crucial role in the performance of IPOs. Furthermore, the information asymmetry and impact of market policies managed by Capital Market Authority significantly affect the IPOs performance. Survey results of 41 respondents revealed that underwriting reputation is the key IPO success and IPO price is the main decision-making factor. Also it was found that investors felt manipulation in IPO process. Regression analysis showed the economic factors and market conduciveness has positive impact on the investor sentiments. Real Estate Investment Trusts (REITS) sector was further analyzed to understand the impact of IPO underpricing and pre and post IPO performance of REITs on Tadawul. The data results have shown that the price change has been positive on the first day of the IPO listing for all the companies as opposed to the price change after 1 month, where some REITs have had a negative return also. On the ratios as well, majority of the companies have shown improvement in post IPO in the REITs sector.

Keywords: IPO’s, Underpricing, Capital markets, REITs, Saudi Arabia.

Suggested Citation

IJEFMS, Editor and Noreen, Umara, Trends Initial Public Offerings (IPOS) In Saudi Arabia (March 31, 2020). Dr. Umara Noreen, Shouroq Alzenaidy, Rawan Alsabi, Zaheer Ahmed, Trends Initial Public Offerings (IPOS) In Saudi Arabia, International Journal of Empirical Finance and Management Sciences 03(2020):07-29, Available at SSRN: https://ssrn.com/abstract=3951647

Editor IJEFMS (Contact Author)

affiliation not provided to SSRN

Umara Noreen

Prince Sultan University ( email )

PO Box 66833
Prince Sultan University
Riyadh, Riyadh 11586
Saudi Arabia

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