IPO Waves and Hot Markets in the UK

Chapter 4 (pp. 76-97) in Handbook of Research on IPOs, edited by Mario Levis and Silvio Vismara, Cheltenham, UK: Edward Elgar Publishing, 2013

31 Pages Posted: 19 Jan 2013 Last revised: 19 Feb 2014

See all articles by Shantanu Banerjee

Shantanu Banerjee

Lancaster University - Management School

Ufuk Güçbilmez

University of Glasgow - Adam Smith Business School

Grzegorz Pawlina

Lancaster University - Department of Accounting and Finance

Date Written: September 5, 2013

Abstract

This paper examines the cyclical nature of IPO activity in the UK. The results indicate a lead-lag relationship between IPO initial returns and volume. IPO volume is sensitive to recent changes in market conditions. There is evidence of industry concentration in hot markets, and fi rms raise more equity during these periods. Overall, IPO waves in the UK share similar characteristics with those in the US. The findings are consistent with rational explanations of IPO waves. However, explanations based on investor sentiment and market timing cannot be ruled out, since there is a strong positive relationship between IPO volume and the market's price-to-book ratio.

Keywords: IPO, underpricing, investor sentiment

JEL Classification: E32, G32

Suggested Citation

Banerjee, Shantanu and Güçbilmez, Ufuk and Pawlina, Grzegorz, IPO Waves and Hot Markets in the UK (September 5, 2013). Chapter 4 (pp. 76-97) in Handbook of Research on IPOs, edited by Mario Levis and Silvio Vismara, Cheltenham, UK: Edward Elgar Publishing, 2013, Available at SSRN: https://ssrn.com/abstract=2202921

Shantanu Banerjee

Lancaster University - Management School ( email )

Lancaster, Lancashire LA1 4YX
United Kingdom

Ufuk Güçbilmez (Contact Author)

University of Glasgow - Adam Smith Business School ( email )

Glasgow, Scotland
United Kingdom

Grzegorz Pawlina

Lancaster University - Department of Accounting and Finance ( email )

The Management School
Lancaster LA1 4YX
United Kingdom
+ 44 1524 592834 (Phone)
+ 44 1524 847321 (Fax)

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