Consistent with the empirical findings in the literature in developed and emerging markets, our analysis suggests that the operating performance, measured by return on assets (ROA) and return on equity (ROE), deteriorates in post-IPO period. The analysis has been conducted on the firm level, industry level, across time, based on the use of the IPO proceedings, and government holdings before and after the IPO. The main result of the analysis still holds in all specifications. Data Envelopment Analysis (DEA) technique has also been implemented to investigate the question in hand. DEA allows us to examine the difference between the pre-and the post-IPO operating performance based on several inputs and outputs. The empirical results are similar to the analysis of means. Most companies show a decline in their performance relative to their pre-IPO performance.
This is the final report of the project “An Empirical Investigation of the Post-IPO Operating Performance in the Saudi Stock Market”. This report summarizes the two previous reports and adds further analysis to the post-IPO operating performance across sectors, time, government ownership, and the IPO proceedings. Also, this report discusses the challenges and the opportunities encountered by the team throughout the project stages. Finally, the report concludes and gives recommendations that arise from the analysis and the investigation process.