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Government Ownership, Political Regime, and Flipping of IPOs in Pakistan: Evidence from Emerging Market

Author

Listed:
  • Ayesha Anwar
  • Rasidah Mohd-Rashid
  • Norliza Che-Yahya
  • Mohamed Bouteraa
  • Brahim Chekima

Abstract

This study investigates how government ownership (state-owned IPOs) and the political regime affect the flipping of IPO shares, as well as the moderating impact of investor demand on the association between the political regime and flipping activity. Ordinary least square was employed to investigate the impact of government ownership and political regime on the flipping of IPO shares. The data set consists of 95 IPO firms listed on the Pakistan Stock Exchange (PSX) during the period of January 2000 to December 2019. The findings of this study reveal that government ownership and a political regime have a positive influence on the flipping of IPO shares, demonstrating the quality that creates liquidity in Pakistan’s IPO market. Furthermore, in Pakistan, investor demand has been reported to moderate the association between the political regime and IPO flipping activity. This research offers valuable insights that may result in abnormal trading behavior or flipping immediately after listing. Likewise, state-owned IPOs and the political regime appear to be more appealing to investors, signaling the firms’ high quality, causing in increased demand and higher levels of flipping. As a result, the government and regulators may devise policies to control unusual trading, ensuring that government investments in the capital market are successful and also that the government’s economic and political objectives are met. Moreover, this research is critical for investors and issuers making investment decisions. JEL Classification : G12, G18, G32.

Suggested Citation

  • Ayesha Anwar & Rasidah Mohd-Rashid & Norliza Che-Yahya & Mohamed Bouteraa & Brahim Chekima, 2024. "Government Ownership, Political Regime, and Flipping of IPOs in Pakistan: Evidence from Emerging Market," SAGE Open, , vol. 14(4), pages 21582440241, November.
    • Handle: RePEc:sae:sagope:v:14:y:2024:i:4:p:21582440241260962
    DOI: 10.1177/21582440241260962
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    More about this item

    Keywords

    initial public offerings; flipping activity; government ownership; state-owned IPO; investor demand; Pakistan Stock Exchange;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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