An Empirical Analysis of Pre and Post Initial Public Offering (IPO) Performance
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Date
2016-05-13
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International Journal of Current Research
Abstract
This study investigates the impact of pre and post Initial Public Offering (IPO) Performance on
selected firms. The data analysis ranges from 1 to 300 observations within a model specification
framework on a Multivariate methodology. Two models were formulated to carry out the analysis on
an Eview7 statistical package. The objective was to find out the position of the selected firms before
and after IPO has been initiated and do a comparative analysis. From the analysis, Model two was
seen as the best model to carry out a research of this nature because the independent variables such as
age of company, total asset, ownership concentration, CEO stockholdings, average return on capital
employed and the industry in which the company operates are regarded as the factors that influences
IPO performance. The result shows that all the variables are positive showing a direct relation with
IPOR. The coefficient of determination shows 52.9% indicating that the model is good fit and the F- statistics of 54.8558 shows that all the variables in the model are statistically significant. However,
the Durbin Watson statistics shows the presence of positive serial correlation. The study therefore
recommend that firms should uphold the principles of good corporate governance and also ensure
they disclose relevant information to the public in terms of CEO stockholdings in the company so as
to build public confidence and to create and maintain good business image.
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Keywords
Initial Public Offering, Regression, CEO Stockholdings, Age of Company, Total Asset
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