Abstract:
This study examines the IPO waiting period from offering to the first trading day listed on the
Pakistan Stock Exchange from 1995 to 2018. We find that firms float shares to the general
public have passed through multiple layers of inspection by underwriters, auditors,
institutional investors, and regulatory bodies like SECP. The waiting period of unseasoned
issue is an essential predictor of uncertainty associated with a firm. To test this proposition,
we first determine the endogenous factors related to an issuer itself like offer price, price
discovery method, size, and age of the firm. We then incorporated some exogenous factors,
most importantly, the hot IPO period, market sentiment, and regulatory regime to investigate
their impact on the waiting period. The results confirm that offer-price, percentage of shares
after IPO, book building mechanism and SECP regime influence the IPO waiting period. This
study further finds that short waiting period IPOs are associated with less ex-ante uncertainty
thereby lowering under-pricing. In addition, short waiting period IPOs are prone to less return
volatility and higher the aftermarket stock performance.
