The Short and Long-Run Performance of Sharia-Compliant Initial Public Offerings (IPOs) in the Emerging Market: Evidence from the Saudi Arabia Share Market

Authors

  • Kamilah Kamaludin Department of Finance, University Malaya-Wales
  • Nadisah Zakaria Finance Department, Prince Sultan University,

Keywords:

Initial public offerings (IPOs), short- and long-run performance, Sharia-compliant investments, Kingdom of Saudi Arabia, buy-and-hold abnormal return (BHAR).

Abstract

This study examines the short- and long-run share performance of 40 Sharia-compliant IPO companies listed on the Saudi Arabia Stock Exchange (Tadawul) from 1st January 2000 to 31st August 2017. This study employs both market-adjusted initial returns and buy-and-hold abnormal return to measure the share performance of IPOs. First, the analysis shows that Sharia-compliant IPOs are underpricing with abnormal initial returns of 79.23%. Second, the results suggest that investors could earn positive and significant market-adjusted BHAR of 14.67% if they held IPO shares over the eighteen-month period following the listing date when EWI is used as a market benchmark. This study also finds that IPO companies outperformed the VWI although the results are insignificant. The findings on the long-run overperformance contribute to the IPO literature on long-run performance of Sharia-compliant IPOs. The present study would benefit foreign investors and market regulators who are trying to understand the market behaviour in an emerging market.

Downloads

Published

2019-09-24

How to Cite

Kamaludin, K., & Zakaria, N. (2019). The Short and Long-Run Performance of Sharia-Compliant Initial Public Offerings (IPOs) in the Emerging Market: Evidence from the Saudi Arabia Share Market. Journal of Reviews on Global Economics, 8, 706–716. Retrieved from https://lifescienceglobalca.com/index.php/jrge/article/view/6136

Issue

Vol. 8 (2019)

Section

Special Issue - Nexus between Financial Markets, Technology and Firm Performance in Era of Industry 4.0

License

Policy for Journals/Articles with Open Access

Authors who publish with this journal agree to the following terms:

  • Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

  • Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work

Policy for Journals / Manuscript with Paid Access

Authors who publish with this journal agree to the following terms:

  • Publisher retain copyright .

  • Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work .