IPO Performance and Pricing Efficiency in the UAE: CAPM-Based Evidence from ADX and DFM

Abstract

This study investigates the short-term performance of 11IPOs listed on the Abu Dhabi Securities Exchange (ADX) and Dubai FinancialMarket (DFM) from 2020 to 2024 using CAPM-based regressions. Results revealthat overpricing, not under-pricing, was the dominant pattern, with most IPOsshowing negative abnormal returns after adjusting for market risk. DFM IPOswere largely market driven, while ADX IPOs were more influenced by liquidityshocks and firm-specific events. Future research should expand to multifactormodels, behavioural measures, and cross GCC comparisons. If redone, the studywould increase sample size, use alternative liquidity measures, and add sectorspecific controls. Recommendations include enhancing pre-IPO disclosurerequirements, adopting dynamic and data driven pricing strategies, andincorporating liquidity signals into investment decisions. These steps wouldimprove transparency, valuation accuracy, and market efficiency, supporting thesustainable growth of the UAE’s IPO market.