Short Run Underpricing of Initial Public Offering (IPOs) in the Johannesburg Stock Exchange (JSE)

Working paper 344
Gillian van Heerden and Paul Alagidede
Publication date: 
April, 2013
Review of Development Finance

The underpricing of initial public offerings (IPOs) represents one of the anomalies observed in primary markets worldwide, however, the depth and
breadth of it varies from country to country, and sector to sector. This study is an empirical analysis of short run performance of IPOs in the Johannesburg StockExchange (JSE). Using data for 138 South African IPOs that were listed on the JSE from 2006 to 2010, we found significant short run underpricing. A sector wise analysis of three broad sectors indicated that the financial sector had the largest IPO underpricing, particularly evident in 2007. The year-wise analysis is also documented.

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