An examination of the Tunisian IPO pricing in the short and long run: 1992-1997

The new issue process in Tunisia is examined and evidence for underpricing and aftermarket performance of Initial Public Offerings are presented. Substantial positive abnormal returns are obtained in the short run and this finding is similar to that reported in other nations. A positive aftermarket return of 11.04% is found confirming underpricing but contrasting with all previous studies except that of Dawson. Solutions are proposed to reduce underpricing dealing with mechanisms by which companies initially offer shares of common stock to institutional and individual investors and the allocation procedures of new issues.