IPO Underpricing Over Time: Evidence from the UK

Posted: 17 Nov 2009

See all articles by Stephen P. Ferris

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Gregory Noronha

University of Washington, Tacoma - Milgard School of Business

Emre Unlu

University of Nebraska at Lincoln

Date Written: 2004

Abstract

The changing nature of initial public offering (IPO) underpricing is examined using a sample of 513 IPOs launched in the UK from 1993 to 2001. It is found that the mean UK underpricing is initially less than that in the USA, reverses itself in the mid-1990s, returns to a lower level during the bubble period, but exceeds US underpricing for the last years of the sample. A growing amount of money left-on-the-table by UK underwriters is also observed. The analysis of IPO characteristics shows the simultaneous presence of changing composition and incentive realignment effects in the UK IPO market. These effects are most evident during the technology/internet equity bubble, which spans the last two subperiods of this study. It is concluded that although the market frenzy of the technology/internet bubble was present in the UK IPO market, its influence appears more limited than that documented for the US.(Publication abstract)

Keywords: Stocks, Internet industry, Initial public offerings (IPO), Valuation, High technology industries

Suggested Citation

Ferris, Stephen P. and Noronha, Gregory and Unlu, Emre, IPO Underpricing Over Time: Evidence from the UK (2004). Applied Economics Letters, Vol. 11, Issue 1, p. 5-9 2004. Available at SSRN: https://ssrn.com/abstract=1504501

Stephen P. Ferris (Contact Author)

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

Gregory Noronha

University of Washington, Tacoma - Milgard School of Business ( email )

1900 Commerce Street
Campus Box 358420
Tacoma, WA 98402-3100
United States

Emre Unlu

University of Nebraska at Lincoln ( email )

Lincoln, NE 68588
United States

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