Long-run Price Performance of Initial Public Offerings in Bangladesh

Abstract

Long-run underperformance is a major a anomaly of the IPO market. But it is not as pervasive in nature as short run underpricing. The objective of this paper is to document empirically the long-run price performance of IPOs in Bangladesh. In addition to investigate whether this phenomena has any cross sectional or temporal pattern. We find a general pattern of underperformance in our market after five years of going public.  The underperformance is 10.19% per year for investing in IPOs relative to the market. We observe some temporal variations and variations across different industries for long-run performance of IPOs.

Keywords: long-run performance, initial return, short –run underpricing, wealth relatives.