Do Ipos Affect the Prices of Other Stocks? Evidence from Emerging Markets

Posted: 23 Mar 2009 Last revised: 4 May 2012

See all articles by Matías Braun

Matías Braun

Universidad Adolfo Ibanez

Borja Larrain

Pontificia Universidad Catolica de Chile

Date Written: April 1, 2009

Abstract

We show that the introduction of a large asset permanently affects the prices of existing assets in a market. Using data from 254 initial public offerings (IPOs) in 22 emerging markets, we find that portfolios that covary highly with the IPO experience a decline in prices relative to other portfolios during the month of the issue. The effects are stronger when the IPO is issued in a market that is less integrated internationally and when the IPO is bigger. This evidence is consistent with the idea that shocks to asset supply have a significant effect on asset prices.

Keywords: G12, G14, G15

Suggested Citation

Braun, Matias and Larrain, Borja, Do Ipos Affect the Prices of Other Stocks? Evidence from Emerging Markets (April 1, 2009). The Review of Financial Studies, Vol. 22, Issue 4, pp. 1505-1544, 2009. Available at SSRN: https://ssrn.com/abstract=1365689 or http://dx.doi.org/hhn025

Matias Braun (Contact Author)

Universidad Adolfo Ibanez ( email )

Diagonal Las Torres 2640 Peñaleón
Presidente Errázuriz 3485 Las Condes
Santiago, 794-1169
Chile

HOME PAGE: http://www.matiasbraun.com

Borja Larrain

Pontificia Universidad Catolica de Chile ( email )

Ave. Vicuna Mackenna 4860, Macul
Santiago
Chile

HOME PAGE: http://economiayadministracion.uc.cl/personal/blarrain/

Register to save articles to
your library

Register

Paper statistics

Abstract Views
580
PlumX Metrics