Does Maturity Level of Newly Listed Firms Matter in the Long-Run Performance? Evidence from Pakistan

Abstract

In this study, the sample of newly IPO firms at PSX from 2000 to 2018 is selected to observe the performance in the long run, under different maturity level. The analysis is based on Jensen’s alpha obtained through CAPM, four factors (4-F), and three factors model (3-F). Based on the analysis of Jensen’s alpha, the underpricing of IPOs disappeared after the periods of one to three years to suggest that investors can not earn risk-adjusted positive returns accounting for market, momentum, value and size factors. In the analysis of GCT regression model, for the three different maturity level, the severe underperformance of these new firms are to be observed. Further, the result of new firms through GCT model show that different maturity (1-5 years, 6-10 years, and more than 10 years) of firms do not matter, and overall newly firms underperform in long run.