Pre-COVID19 Scenario of Aftermarket Price Performance of Initial Public Offerings: Evidence from Dhaka Stock Exchange
Keywords:
Initial Public Offering, Aftermarket Price, IPO Performance, Dhaka Stock Exchange, BangladeshAbstract
Purpose of the study: The purpose of the study is to test the short-run price performance of IPO stocks in the Dhaka Stock Exchange from 2011 to 2018.
Methodology: The Dhaka Stock Exchange General Index i.e. DSEX has been used as a proxy for market return. Secondary data are used to analyze the return anomalies within the primary market.
Findings: The study finds that Bangladesh’s market for IPOs was underpriced. The results denote that post-market offers provide positive short-run returns. High returns were to be found within the early days of listings. Hence, Investors are highly profitable in the short-run period.
Implications: This study highlights specifically the return behavior of the market in the short-term period. Investors are directly affected by this investment pattern which leads to abnormal returns in the short-term period. Less number of IPOs is the prime reason for these short-term abnormal returns.
Limitations and Future direction: The data is taken from 2011 to 2018 which represents a small sample size of merely eight years. A larger sample size directs to more accuracy and the COVID scenario can be dragged particularly to see the return anomalies between the different timeframes.
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