Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange

This study investigates the variables affecting the Initial Public Offering (IPO) initial returns in Pakistan from 1996 to 2019 using three pre-listing information variables namely country-level institutional quality, sponsor ownership, and pricing mechanism motivated by the fact that the Pakistani...

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Main Author:	Mehmood, Waqas
Format:	Thesis
Language:	eng eng eng
Published:	2022
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/11155/1/depositpermission-902740.pdf https://etd.uum.edu.my/11155/2/s902740_01.pdf https://etd.uum.edu.my/11155/3/s902740_02.pdf
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id	my-uum-etd.11155
record_format	uketd_dc
spelling	my-uum-etd.111552024-06-10T02:40:34Z Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange 2022 Mehmood, Waqas Mohd Rashid, Rasidah Ahmad, Abd Halim @ Hamilton College of Business (COB) College of Business HG Finance This study investigates the variables affecting the Initial Public Offering (IPO) initial returns in Pakistan from 1996 to 2019 using three pre-listing information variables namely country-level institutional quality, sponsor ownership, and pricing mechanism motivated by the fact that the Pakistani IPO market contains diverse institutional and regulatory frameworks. Multiple regression analyses, i.e., Ordinary Least Square and Stepwise Regression, were used on 102 IPOs listed in the Pakistan stock market., IPO oversubscription and underwriter reputation are incorporated as moderating variables. Findings show that political stability, government effectiveness, and regulatory quality positively affect IPO initial return, whereas the lock-up ratio give a negative effect. Oversubscription give a negative moderating effect on the relationship between the pricing mechanism and IPO initial return. Political stability was found to lead to a high IPO initial return. Further, the quality of public service, the independence of civil service from political influences, and governmental legitimacy enhance investors’ confidence in companies’ prospects which increase demand for IPOs and higher initial returns. In addition, a good regulatory quality promotes market transparency and reduces uncertainty, which give signal of high-quality IPOs, resulting in high initial returns. The negative impact of the lock-up ratio on IPO initial return supports the prediction of the Risk-Return Trade-Off Theory, which states that the lock-up ratio signals the IPO quality. Meanwhile, the rule of law, lock-up period, and pricing mechanism are insignificant. Similarly, underwriter reputation plays an insignificant moderating role in the link between pricing mechanism and IPO initial return. The results offer valuable insights to market regulators, policymakers, investors, and underwriters in ensuring adequate subscriptions of the shares issued, as these variables are crucial for company transparency and market efficiency. The findings will also facilitate better investment decision-making concerning IPO subscriptions. 2022 Thesis https://etd.uum.edu.my/11155/ https://etd.uum.edu.my/11155/1/depositpermission-902740.pdf text eng staffonly https://etd.uum.edu.my/11155/2/s902740_01.pdf text eng 2025-01-06 staffonly https://etd.uum.edu.my/11155/3/s902740_02.pdf text eng 2025-01-06 staffonly other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng eng
advisor	Mohd Rashid, Rasidah Ahmad, Abd Halim @ Hamilton
topic	HG Finance
spellingShingle	HG Finance Mehmood, Waqas Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange
description	This study investigates the variables affecting the Initial Public Offering (IPO) initial returns in Pakistan from 1996 to 2019 using three pre-listing information variables namely country-level institutional quality, sponsor ownership, and pricing mechanism motivated by the fact that the Pakistani IPO market contains diverse institutional and regulatory frameworks. Multiple regression analyses, i.e., Ordinary Least Square and Stepwise Regression, were used on 102 IPOs listed in the Pakistan stock market., IPO oversubscription and underwriter reputation are incorporated as moderating variables. Findings show that political stability, government effectiveness, and regulatory quality positively affect IPO initial return, whereas the lock-up ratio give a negative effect. Oversubscription give a negative moderating effect on the relationship between the pricing mechanism and IPO initial return. Political stability was found to lead to a high IPO initial return. Further, the quality of public service, the independence of civil service from political influences, and governmental legitimacy enhance investors’ confidence in companies’ prospects which increase demand for IPOs and higher initial returns. In addition, a good regulatory quality promotes market transparency and reduces uncertainty, which give signal of high-quality IPOs, resulting in high initial returns. The negative impact of the lock-up ratio on IPO initial return supports the prediction of the Risk-Return Trade-Off Theory, which states that the lock-up ratio signals the IPO quality. Meanwhile, the rule of law, lock-up period, and pricing mechanism are insignificant. Similarly, underwriter reputation plays an insignificant moderating role in the link between pricing mechanism and IPO initial return. The results offer valuable insights to market regulators, policymakers, investors, and underwriters in ensuring adequate subscriptions of the shares issued, as these variables are crucial for company transparency and market efficiency. The findings will also facilitate better investment decision-making concerning IPO subscriptions.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Mehmood, Waqas
author_facet	Mehmood, Waqas
author_sort	Mehmood, Waqas
title	Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange
title_short	Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange
title_full	Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange
title_fullStr	Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange
title_full_unstemmed	Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange
title_sort	impact of country-level institutional quality, sponsors ownership and price mechanism on ipo initial return in pakistan stock exchange
granting_institution	Universiti Utara Malaysia
granting_department	College of Business (COB)
publishDate	2022
url	https://etd.uum.edu.my/11155/1/depositpermission-902740.pdf https://etd.uum.edu.my/11155/2/s902740_01.pdf https://etd.uum.edu.my/11155/3/s902740_02.pdf
_version_	1804888202394206208

Impact of Country-Level Institutional Quality, Sponsors Ownership and Price Mechanism on Ipo Initial Return in Pakistan Stock Exchange

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