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

Kamaludin, Kamilah; Zakaria, Nadisah

doi:10.6000/1929-7092.2019.08.61

Cited by 9 publications

(9 citation statements)

References 25 publications

(60 reference statements)

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“…For example, Alanazi and Al-Zoubi (2015) find that Saudi Arabian IPO firms underperform the Saudi Arabian all shares index, Tadawul, by 8.92%, in a one-year window. In contrast, Kamaludin and Zakaria (2018) find IPO firms listed in Saudi Arabia outperform Tadawul by 22% in a 12-month period. To date and to the best of our knowledge, there is no single empirical evidence that has yet examined the concurrent effects of mandatory IFRS and intertemporal changes in the quality of formal institutions on the aftermarket performance of IPO firms in emerging countries like Saudi Arabia.…”

Section: Brief Literature Reviewmentioning

confidence: 76%

“…Note 33. Disclosure and IPO literature provide no consensus concerning the ideal length of time to proxy for long-term performance, as it ranges from a few weeks up to three years (Dorsman et al 2010;Alanazi & Al-Zoubi 2015;Kamaludin & Zakaria 2018). Due to the use of different time-windows to capture the aftermarket performance of IPO firms, this literature produces widely fragmented results.…”

Section: Od=ajperesandconvert_to=urlandcacheid=f9c937c6-6bef-46bb-8a91-9fmentioning

confidence: 99%

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The Concurrent Effects of IFRS Mandate and Formal Institutional Quality on the Aftermarket Performance of IPO Firms in Emerging Countries

Alidarous¹,

Jamaani²

2021

IJFR

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This paper provides the first empirical investigation seeking to find whether International Financial Reporting Standards (IFRS) mandate, changes in the quality of formal institutions, or, the concurrent effect of these two elements can explain the ongoing phenomenon of the aftermarket performance difference of Initial Public Offerings (IPO) firms. We perceive little awareness of the concurrent effect of IFRS mandate and the quality of formal institutions in emerging countries, although these nations account for more than half of the IFRS mandating countries. We employ numerous Difference-in-Differences (DiD) models utilizing reliable IPO and formal institutional data for Saudi Arabia from 2005 to 2017. Our empirical results show that the absence of IFRS influence in the aftermarket performance of IPO firms led us to posit that the quality of formal institutions is the key player in influencing long-term performance of IPO firms in Saudi Arabia. We uncover evidence showing that an improvement in formal institutional quality increases the long-term performance of IPO firms. We find no evidence of a concurrent effect of changes in formal institutional quality and IFRS mandate on the aftermarket performance of IPO firms. Our results show that what does really matter in relation to the aftermarket performance of IPO firms in Saudi Arabia, are the enhancements in the level of formal institutional quality. Our results provide some important implications for IFRS-IPO research.

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Section: Brief Literature Reviewmentioning

confidence: 76%

Section: Od=ajperesandconvert_to=urlandcacheid=f9c937c6-6bef-46bb-8a91-9fmentioning

confidence: 99%

The Concurrent Effects of IFRS Mandate and Formal Institutional Quality on the Aftermarket Performance of IPO Firms in Emerging Countries

Alidarous¹,

Jamaani²

2021

IJFR

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show abstract

“…In comparison, AlShiab (2018) presented evidence that IPO businesses traded in Saudi Arabia beat the Tadawul by about 22.5 % over the course of one year. Likewise, Kamaludin and Zakaria (2018) found IPOs outperform by 9% over one year period.…”

Section: Literature Reviewmentioning

confidence: 96%

The Vanishing Role of IFRS Application on the Performance of Saudi Arabian IPO Companies

Jamaani¹

2023

IJFR

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This research investigates the long-term impact of the International Financial Reporting Standards (IFRS) regulation on the performance of Initial Public Offering (IPO) corporations in developing market nations. The research employs 124 IPO companies listed in Saudi Arabia from 2003 to 2019 using Difference-in-Differences (DiD) estimation. It was discovered that enforcing the use of IFRS provides no role on the performance of IPO companies in the long-run. On the secondary market, where there was low information asymmetry, the IFRS did not enhance the aftermarket performance of IPO corporations. The success of the IFRS in creating high-quality financial reporting is dependent on the level of information asymmetry and disappears when analysts and investors have access to an abundance of information about traded enterprises, especially in emerging IPO markets like Saudi Arabia.

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“…Huang et al (2019), studied how IPO performance post listing depends on the stability and development of the financial market because of a better long-term positive outlook and lesser asymmetry of information. In this context, Kamaludin and Zakaria (2019) conducted a study on Sharia-Compliant IPOs on a short term and long term basis using market adjusted returns and abnormal return. The study observed that IPOs outperform the benchmark indices (equal weight and value weight) on a long run.…”

Section: Related Workmentioning

confidence: 99%

A Performance based Ranking of Initial Public Offerings (IPOs) in India

Biswas

Joshi

2023

J. Decis. Anal. Int. Comp.

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In recent times, Indian Stock Market (ISM) has been witnessing a surge in the number of IPOs listed in stock exchanges. However, in many occasions it has been noticed that post-listing performance of several IPOs are below par to the expectations of the investors. IPO performance has been one of the major concerns. In this context, the present paper endeavours to carry out a comparative performance assessment of a list of IPOs. We consider a period of three years after listing. Our sample consists of a list of IPOs having heterogeneous nature of business operations and introduced in 2018. We consider two aspects of the performance such as market-based indicators and fundamental efficiency in terms of profitability, liquidity and risk. For comparison, LOgarithmic Percentage Change-driven Objective Weighting (LOPCOW) is used. The study period is considered as Fy 2020-21. The results reflect that for IPOs, market performance does not necessarily because of the fundamental efficiency. Further, we notice that the nature of equity ownership does not influence the market performance significantly. We surmise that during initial years, the performance of the IPOs at the marketplace is more driven by speculations and short-term goals of the investors. The result of validation test indicates that the ranking using LOPCOW method is comparable and consistent with a widely used model like Entropy.

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

Cited by 9 publications

References 25 publications

The Concurrent Effects of IFRS Mandate and Formal Institutional Quality on the Aftermarket Performance of IPO Firms in Emerging Countries

The Concurrent Effects of IFRS Mandate and Formal Institutional Quality on the Aftermarket Performance of IPO Firms in Emerging Countries

The Vanishing Role of IFRS Application on the Performance of Saudi Arabian IPO Companies

A Performance based Ranking of Initial Public Offerings (IPOs) in India

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