Underpricing of Initial Public Offerings on African Stock Markets: Ghana and Nigeria
Loading...
Files
Date
2012-07
Authors
Osei, Kofi A.
Adjasi, Charles K.D.
Fiawoyife, Eme U.
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
The paper provides empirical analyses of the initial and after-market short-run and
long-run IPO returns on the Ghanaian and Nigerian stock markets over the period 1990
to 2006. The results show that the Ghanaian IPOs, on average, are underpriced on the
initial trading day by 6.7% (market unadjusted) and 6.2% (market adjusted). In the case
of Nigeria, the average underpricing is much higher at 43.3% and 43.1% for market
unadjusted and market adjusted abnormal returns, respectively. There is evidence of
three-year long-run underperformance as shown in the low mean buy and hold average
return (BHAR) of 1.5% for the IPOs in Ghana and 0.6% for IPOs in Nigeria. Results
from our regression model explaining initial abnormal returns for the IPOs of Nigeria
show that size of firm and audit quality are important variables affecting underpricing.
The results also show the presence of a non-linear relationship between the offer price
and underpricing.
Description
HG 4028 .S 7 O84 2012
Keywords
Going Public - (securities ) - Ghana , Going Public - (securities ) - Nigeria , Stocks - Prices - Ghana , abnormal returns , stock market , underpricing