Abstract:

This study examines the short-and-long-run share performance of IPO companies listed on the Saudi Arabia Stock Exchange (Tadawul) from 1st January 2000 to 31st August 2017. 45 IPO companies were included in this study. This study employs the event time approach and abnormal returns are calculated using the market-adjusted initial returns for short-run share performance and buy-and-hold abnormal returns (BHAR) for long-run performance. First, our analysis reports under-pricing of IPO shares at Tadawul with a high abnormal initial return of 76.61%. Second, we find over performance of IPO shares in the long-run where the market-adjusted BHAR outperformed both market indices -(i) positive and significant when benchmarked against EWI; and (ii) positive but not significant when benchmarked against VWI. Our findings are consistent with extant literature for the developing countries like Malaysia and Singapore. Key Words: Initial public offerings (IPOs), short-and-long run performance, Saudi Arabia