Tunisian IPOs underpricing and long-run underperformance: Highlight and explanation

This study provides evidence on both short-run and long-run performance of firms listed on the Tunisian Stock Market, using a sample of 40 Initial Public Offerings (IPOs) during the period 1992-2008. The factors explaining the performance are also investigated. The empirical results show that IPOs are significantly underpriced in the short-run and underperformed using both CAR and WR methods. We use the BVMT index (the market capitalization weighted index for the Tunisian Stock Exchange) as a proxy for the market index. On the basis of the multiple regression models, we have worked on testing the different possible explanations of short run underpricing and long run underperformance of Tunisian IPOs, relying on variables such as the market conditions, the characteristics of the firm and those related to the introduction in Stock Market.