Resumen
This paper provides some new evidence on the determinants of long run operating and share price performance of Initial Public Offerings (IPO) on the Johannesburg Stock Exchange (JSE). It has been hypothesised that the information contained in the pre listing documents could shed some light on the aftermarket performance of South African IPO shares. In line with previous literature, South African IPO shares significantly underperformed the market on average. Additionally, there is a statistically significant negative relationship between IPO Volume and long run performance, suggesting that the South African IPO market may be subject to the fads and over optimism theory of Ritter (1991). The overoptimism hypothesis is further cemented by a negative correlation between pre IPO revenue forecast and aftermarket operating performance. Listing expenses play a moderate role in the reduction of the aftermarket performance of IPOs on the JSE. However, it appears that international investment banks have a positive influence on the aftermarket performance of IPOs on the JSE. Likewise, firms audited by the BIG 4 audit firms tend to perform well in terms of aftermarket buy and hold returns. Large firms at the time of listing tend to perform well and firms with high growth prospects at the time of listing generate a negative and significant return on their investment in total assets. Although the contingent liabilities disclosed in the prelisting reports negatively influence most of the measurers of aftermarket performance, the relationship is, by and large, insignificant.