Ehsan Ahmad Qureshi2025-07-302025-07-302014-07https://escholar.umt.edu.pk/handle/123456789/3988This thesis investigates whether the two main anomalies (Short Term under-pricing & long tern under-performance) of IPO (Initial Public Offering) exist or not in the context of Pakistan. This study also investigates the main determinants of IPO underpricing and IPO Underperformance for firms listed in Karachi Stock Exchange from 2000 to 2012. Data collected from prospectus & offer for sale documents in order to see the impact of Pre IPO Characteristics on both anomalies of IPO. The study reveals IPO market in Pakistan reward to investors with some positive returns in short run just like other countries. We concluded that IPO underpricing does exist in emerging market of Pakistan. The degree of Underpricing in the sample (71 IPOs) is 31.17% (short term abnormal returns). The study also reveals that the performance of studied IPOs in long run w.r.t Karachi Stock Exchange is poor for investors; i.e average abnormal holding returns for period of one year are negative. The level of Underperformance is 15.98% in emerging market of Pakistan. Based on regression, we conclude that the significant determinants used to explain the level of underpricing are Underwriter Reputation, Firm Age and Pre IPO Profitability. The impact of Firm Size and Dilution of ownership on Longrun underperformance is also found significant. We also document that determinants Firm Size, Underwriter Reputation and Dilution of Ownership are negatively related with the Level of Underpricing, but offer Size, Firm Age and Pre IPO Profitability are positively related with Underpricing. The determinants Firm Size, Pre IPO Profitability and Dilution of Ownership are negatively related with the Long run Underperformance of IPO. It is also found that Firm Age and Underwriter Reputation and offer size are positively related with the level of Underperformance of IPO. Our results strongly support the Signaling theory and Ex-ante Uncertainty Model of Asymmetric Information Theoryen-USThesis