Title page for ETD etd-05152011-102254

Document Type

Master's Dissertation

Author

Mangozhe, Gwarega Triumph

URN

etd-05152011-102254

Document Title

The long-run investment performance of initial public offerings (IPOs) in South Africa

Degree

MBA

Department

Gordon Institute of Business Science

Supervisor

Advisor Name	Title
Prof A Saville	Committee Chair

Keywords

long-run performance
initial public offerings
fama-french model

Date

2010-11-10

Availability

unrestricted

Abstract

This study investigated the long-run investment performance of 411 South African IPOs during the period 1992 to 2007. Consistent with historical studies, no evidence of abnormal performance was found on a calendar-time approach using the Fama- French (1993) three-factor model. While the long-run performance did not differ materially, factors such as financial and industrial industry classifications were found to impact after-market performance of IPO portfolios. It was found that large new company issuances within the Financials and Industrials categories produced abnormal returns, but on a collective basis there was no evidence of abnormal performance. In particular, a positive relationship was found to exist between book-tomarket ratios and IPO performance in the financial and industrial sectors, but there was scant evidence on a collective basis. Market conditions were found to have an impact on IPO performance. In periods of market buoyancy, IPOs performed well and in periods of market distress, IPOs‟ performance suffered. The implications of this study are that investors, in making decisions on whether or not to invest in new issues, should not expect to make superior returns to the market over a five-year period by investing in IPOs. IPO performance after the five-year period was not part of the scope for this study and may form the basis for future studies.
Copyright © 2010, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria
Please cite as follows:

Mangozhe, GT 2010, The long-run investment performance of initial public offerings (IPOs) in South Africa, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-05152011-102254/>
F11/229/ag

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