Reassessing the Long-Run Abnormal Performance of Jordanian IPOs: An Event Study Approach

Al Shawawreh Fawaz Khalid ()
Additional contact information
Al Shawawreh Fawaz Khalid: Mutah University, Department of Banking and Finance, Al-Karak, JORDAN

Foundations of Management, 2023, vol. 15, issue 1, 141-160

Abstract: This paper examines and reviews the fundamental challenges that academicians face when using the event study methodology to assess the long-term consequences of financial events on the economy and to describe market reactions. Numerous studies have demonstrated that businesses can experience abnormal returns from 1 to 5 years after major financial events. Also, this paper investigates the long-run price performance of initial public offerings (IPOs) in Amman Stock Exchange (ASE). The sample period expands from 2018 to 2022. Various findings are obtained by employing several analytical methods. First, long-run price performance of IPOs is negative, and a strong evidence shows that the long-run performance is sensitive to the benchmark employed. To assess the long-term performance of IPOs, I used both cumulative abnormal returns (CAR) and buy-and-hold abnormal returns (BHAR) as aggregated models. I explained the methodology which is adopted in this study in detail for the event–time approach. However, I used the crucial values for the skewness-adjusted t-statistic to infer statistical tests. Even though BHAR provided weaker results, all methods indicated negative long-run abnormal returns for IPOs. Yet this performance varied when comparing the performance utilizing ASEI, Fama–French three-factor (FF3F), and matching firm (MF) as benchmarks.

Keywords: event methodology; abnormal return; benchmark; IPOs; skewness-adjusted test (search for similar items in EconPapers)
JEL-codes: G14 G15 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/fman-2023-0011 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:founma:v:15:y:2023:i:1:p:141-160:n:6

DOI: 10.2478/fman-2023-0011

Access Statistics for this article

Foundations of Management is currently edited by Tadeusz Krupa

More articles in Foundations of Management from Sciendo
Bibliographic data for series maintained by Peter Golla ().