The Rise and Fall of the European New Markets: On the Short and Long-run Performance of High-tech Initial Public Offerings
Cardiff University - Cardiff Business School; European Corporate Governance Institute (ECGI)
University of Manchester - Manchester Business School, Division of Accounting Finance
Joseph A. McCahery
Tilburg University - School of Law; European Banking Center (EBC); European Corporate Governance Institute (ECGI); Duisenberg School of Finance; Tilburg Law and Economics Center (TILEC)
Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)
ECGI - Finance Working Paper No. 27/2003
This paper studies the short- and long-run share price performance of firms that have gone public on the Euro New Markets (EuroNMs) since their foundation in 1996/97. The initial and long-run returns are remarkable in four ways. First, underpricing is on average 2-3 times higher than that on the main markets. Second, the proportion of IPOs with negative initial returns is much higher. Third, the long-run buy-and-hold returns and the cumulative abnormal returns are strongly negative and even substantially more negative than longterm returns on the main markets. Fourth, even across EuroNMs, we find large differences in short- and long-run performance. We show that the performance discrepancies can largely be explained by differences in firm and industry characteristics between the various countries involved.
Number of Pages in PDF File: 44
Keywords: initial public offerings, underpricing, long-term performance, stock exchange regulation, listing rules
JEL Classification: G15, G18, G24, G32working papers series
Date posted: September 17, 2003
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