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ABSTRACT. The “Law of One Price” advocates that identical securities must have identical prices regardless of where they are traded. Bangladesh capital market is unique in a sense that IPOs are allowed for dual listing. This means that a company can be simultaneously listed in both the Dhaka Stock Exchange and the Chittagong Stock Exchange. This phenomenon is not common in either developed and developing economies. There is a lack of literature and research on dual listing and its effect on underpricing and portfolio returns. This compels us to investigate the issues related to dual listings. A sample of 191companies that were listed during 1995–2005 is selected to find out the effect of dual listing on the underpricing. Among these 172 companies are dual listed. Dual listed IPOs recorded higher degree of underpricing of which 160 IPOs were underpriced and 12 were overpriced. The level of underpricing among dual listed IPOs was 458.90%. There were 11 companies listed with Dhaka Stock Exchange that are not listed with CSE and the level of underpricing recorded 58.60%. There were 8 companies listed with Chittagong Stock Exchange that are not listed with DSE and the level of underpricing recorded 34%. Findings confirmed that dual listing significantly affects underpricing of IPOs and the law of one price theory is negative in the context of Bangladesh capital market. Findings shows that age of the firm, company size, offer size, and industry that an IPO is listed do contribute to the level of underpricing of dual listed IPOs in the Bangladesh capital market. pp. 81–101
JEL Classification: D24, D51, E22, R53

Keywords: initial public offering, underpricing, dual listing, 
Dhaka Stock Exchange, Chittagong Stock Exchange

MD. AMINUL ISLAM
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School of Business Innovation and Technopreneurship,
Universiti Malaysia Perlis
RUHANI ALI
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Graduate School of Business, Universiti Sains Malaysia
ZAMRI AHMAD
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School of Management, Universiti Sains Malaysia

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