Abstract
This study investigates the short-run performance of initial public offerings in Australia. Based on sources from the Morningstar DatAnalysis database, we analyzed 211 Australian publicly traded initial public offerings (IPO) listed on the Australian stock exchange between January 2011 and December 2015 using multiple regression analysis with dummies to represent industry and listing year. According to our analysis, total market return indicates an IPO underpricing phenomenon whereas secondary market shows an overpricing scenario. Moreover, this analysis supports the contention that short-run performance fluctuations were based on the listing year and industry settings. This study contributes to the literature by analysing the short-run performance of both the primary and secondary markets
Highlights
The evaluation of the market performance of initial public offerings (IPO) has been the focus of finance and accounting studies
The analysis found that primary and total market Australian IPOs were underpriced in the short-run where the secondary market analysis indicates that the Australian IPOs were overpriced
We find that Australian IPOs are underpriced in the short-run IPO performance and this confirms that IPO underpricing performance in an ongoing process, one that is consistent with the findings from most countries
Summary
The evaluation of the market performance of IPOs (initial public offerings) has been the focus of finance and accounting studies. We aim to evaluate the short-run performance of IPOs and their determinants in the Australian market using the most recent data (2011 to December 2015). Considering the above facts, further investigation on the short-run market performance of Australian IPOs using the latest data is necessary to provide valuable results and findings for investors, analysts, researchers, Australian Securities Exchange (ASX), and IPO companies alike. This study aims to broaden this knowledge and fill the void in the current IPO literature by providing important information on pricing, determinant, industry, and relevant firm performance of Australian IPOs. This study aims to: 1) investigate the short-run performance of IPOs issued in the Australian market; 2) identify the potential causes of the short-run performance of Australian IPOs, and 3) examine whether the short-run IPO market performance varies by industry, and listing year covering five-year period from January 2011 to December 2015 inclusive.
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