US Shipping Initial Public Offerings: Do Prospectus and Market Information Matter?
Transportation Research Part E: Logistics and Transportation Review, Vol. 48, No.1, p.276-295, 2012
Posted: 19 Feb 2010 Last revised: 3 Oct 2011
Date Written: October 1, 2011
Abstract
This paper examines the extent that public information, available prior to the initial public offering of shipping companies, is only partially incorporated in the final offer price set by the underwriters. The sample includes 51 shipping US initial public offerings that took place in the period 1987-2008, and our analysis employs a set of IPO, market, and firm specific characteristics. Our findings have both theoretical and empirical implications for shipping IPOs. On the theoretical part, public available information known prior to the offer date may explain 59 percent of the variation in first day returns. Specifically, the results suggest that the partial adjustment theory of (Benveniste and Spindt, 1989) is supported, whereas the winner’s curse theory of (Rock, 1986) is rejected. On the empirical side, the probability of underpricing can be predicted by employing variables available to all IPO participants prior to the issue.
Keywords: Shipping, Initial Public Offerings, Underpricing
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