New evidence of short-run underpricing in Australian IPOs

The short-run market performance of initial public offerings (IPOs) indicates that the prices are often underpriced. This is widely accepted as a universal phenomenon. To find out whether Australian IPOs are underpriced, this paper analyzes the short-run market performance of 254 IPOs by industry, listing year and issue year. To measure the performance, the first-day returns are divided into the opening price primary market and the closing price secondary market, and the post-listing returns are also examined. The study found that, overall, Australian IPOs were underpriced by 25.47% based on abnormal returns and 26.43% on raw returns on the first-day primary market, which was statistically significant at the 1% level. However, analysis of the secondary market indicates that the Australian IPOs were overpriced by 1.55% and 1.54% on abnormal and raw returns, respectively, which was statistically significant at the 5% level. The examination of post-listing returns shows that Australian IPOs were underpriced based on cumulative abnormal returns (CARs) on the 3rd, 6th, and 10thdays by 24.63%, 24.06%, and 23.34%, respectively. The primary and post-listing analysis shows that IPOs in the industrial sector are more attractive to investors, whereas those in the chemical and materials sector are less attractive compared to other sectors. As far as the investors’ wealth is concerned, the study concludes that the short-run market performance analysis should consider both the first-day and post-listing return

Religious Tourism Demand and Country Prosperity: An Empirical Study of Saudi Arabia

This study examines the impact of destination prosperity level on religious tourism flows to Saudi Arabia. The model was empirically tested for a panel of 21 countries from 2000 to 2019. Dynamic panel gravity models were estimated using the Generalised Method of Moments (GMM) difference approach. The study found that the human rights index and prosperity index, word of mouth, Saudi Arabian income, origin country income and investment in tourism at the destination all had a positive and significant impact on religious tourism demand. In contrast, the cost of travel and cost of living at the destination, political risk, visa restrictions, and the relative temperature had an inverse and significant impact. The estimated coefficients suggest that Saudi Arabia should invest in high-quality services to make religious visits a more pleasant and memorable experience. The paper’s originality is in using new non-economic factors such as prosperity and human rights as well as economic factors in estimating tourism demand for religious purposes

An event study of potential insider trading in the Saudi stock market

This study assesses the level of potential insider trading on the Saudi stock market (Tadawul) before and after the introduction of financial reforms. The level of potential insider trading is estimated by employing the market cleanliness measure (MCM) which determines the proportion of significant announcements (SAs) that were preceded by abnormal pre-announcement price movements (APPMs). The analysis was carried out using an event study approach to gauge the impact of an event on a security return. The market model is used to estimate the expected return which is subsequently compared with the actual return. The findings suggest the existence of significant abnormal returns surrounding 128 out of 1,958 unscheduled announcements made by firms listed on Tadawul from 2011 to 2020. The MCM shows that 56.36% of SAs were preceded by APPMs during the pre-financial reforms period whereas the ratio dropped to 45.2% over the post-financial reforms period. Although the findings suggest a reduction in the MCM by 11.16%, the statistics for the subsequent period was not statistically lower than the preceding period. The present study establishes a fundamental basis for tracking the efficacy of new regulations in deterring insider trading activities. This study provides empirical evidence and implications that can be taken into consideration by all parties concerned with illegal insider trading and market integrity

Forecasting China's monthly inbound travel demand

China is currently expecting a growth in inbound travel demand as the result of China's “open door policy,” participation in World Trade Organization (WTO), success in hosting the Olympics in Beijing in the year 2008 and political stability. This paper focused on two issues: (1) forecasting China's monthly inbound travel demand and (2) seasonality and seasonal ARIMA model selection for monthly tourism time-series. In this paper following seasonal ARIMA models were considered: the seasonal ARIMA model with first differences and 11 seasonal dummy variables, the conventional seasonal ARIMA model with first and the fourth differences. In order to select the best forecasting model, finally both seasonal ARIMA models were compared with the AR model with fourth differences, the basic structural model (BSM) and the naïve “No Change” model. In the one-step ahead forecasting comparison, the conventional seasonal ARIMA model with first and the fourth differences becomes the best forecasting model for both inbound foreign visitor demand and total visitor demand. This may be due to the nature of monthly seasonal variations in visitor arrivals, which is less marked. Our forecasts indicate that China foreign visitor arrivals and total visitor arrivals are expected to grow by 14% and 27% respectively from 2002 to 2005