Hot and cold IPO markets : the case of the stock exchange of Mauritius

The aim of this study is to assess the characteristics of the hot and cold IPO markets on the Stock Exchange of Mauritius (SEM). The results show that the hot issues exhibit, on average, a greater degree of underpricing than the cold issues, although the hot issue phenomenon is not a significant driving force in explaining this short-run underpricing. The results are consistent with the predictions of the changing risk composition hypothesis in suggesting that firms going public during hot markets are on average relatively more risky. The findings also support the time adverse selection hypothesis in that the firms’ quality dispersion is statistically different between hot and cold markets. Finally, the study concludes that firms which go public during hot markets do not underperform those going public in cold markets over the longer term

The underpricing of IPOs on the stock exchange of Mauritius

This paper investigates the underpricing of IPOs on the Stock Exchange of Mauritius (SEM). Taking into account the whole population of firms which went public since the inception of the SEM until 2010, the results show an average degree of underpricing within the range 10 to 20%. Using a regression approach, we demonstrate that the aftermarket risk level and auditor's reputation both have a significant positive impact on initial returns. We propose the use of the Z-score as a composite measure of a firm's ex ante financial strength, and find that it has a significant negative effect on the degree of short-run underpricing

Hot and Cold IPO Markets: The case of the Stock Exchange of Mauritius

ABSTRACT The aim of this study is to assess the characteristics of the hot and cold IPO markets on the Stock Exchange of Mauritius. The results show that the hot issues exhibit, on average, a greater degree of underpricing than the cold issues, although the hot issue phenomenon is not a significant driving force in explaining this short-run underpricing. The results are consistent with the predictions of the changing risk composition hypothesis in suggesting that firms going public during hot markets are on average relatively more risky. The findings also support the time adverse selection hypothesis in that the firms' quality dispersion is statistically different between hot and cold markets. Finally, the study concludes that firms which go public during hot markets do not underperform those going public in cold markets over the longer term

The long-run performance of IPOs: the case of the Stock Exchange of Mauritius

This study examines the long-run performance of initial public offerings on the Stock Exchange of Mauritius (SEM). The results show that the 3-year equally weighted cumulative adjusted returns average −16.5%. The magnitude of this underperformance is consistent with most reported studies in different developed and emerging markets. Based on multivariate regression models, firms with small issues and higher ex ante financial strength seem on average to experience greater long-run underperformance, supporting the divergence of opinion and overreaction hypotheses. On the other hand, Mauritian firms do not on average time their offerings to lower cost of capital and as such, there seems to be limited support for the windows of opportunity hypothesis

An exploratory study of financial priorities, financial planning and control practices in voluntary organisations: Perceptions of treasurers in a developing country

Purpose: This study seeks to explore the financial priorities, financial planning and control practices in locally-established voluntary organisations (LVOs) in a developing country context. Design/methodology/approach: Two data collection methods are used to gather views from the LVO treasurers: a questionnaire survey and face-to-face interviews. Findings: Treasurers are less focused on priorities involving internal planning and control and are found to be using financial planning and control practices to a limited and seemingly unsophisticated extent. In consideration of the theoretical implications of organizational legitimacy, overall findings suggest that internal practices are: extensively used to convey a symbolic message of rationality, in the pursuit of a pragmatic or a moral form of legitimacy towards a defined funding body or towards a perceived internal target audience, respectively; used in a limited and informal way due to their perceived inappropriateness in legitimating organizations, in “deference” to the voluntary organizations' (VO) primary social objectives; or are virtually inexistent, due to the strong influence of trust embedded in an “emotional-led” context, thereby explaining the irrelevance of financial/control practices – even for symbolic reasons. Research limitations/implications: The questionnaire response rate has been relatively low but the findings are enhanced by the diversity of organizations which participated in the questionnaire and interview stages. Originality/value: This study focuses on locally established organizations in a developing country context, which are typically less subjected to VO regulation and are “managed” by (unpaid) volunteers. The interviews involved a cross-section of LVOs, which has been instrumental in contemplating the potential relevance of the legitimacy perspective.<br/