Initial Performance of Greek IPOs, Underwriter's Reputation and Oversubscription

Abstract

This paper provides additional international evidence on the IPOs by examining the initial performance and two main determinants of short-run underpricing of 169 IPOs listed on the Athens Stock Exchange (ASE) over the period 1997-2002. The initial performance of the IPOs is measured by calculated two formulas: the raw returns and the excess or adjusted returns of the first, fifth and twenty first day respectively.

Furthermore, we use a proxy to rank the underwriters' prestige along with the times of oversubscription, which are introduced as explanatory variables in our model. The results of the analysis provide evidence of significant underpricing. Furthermore, the cross sectional analysis on the determinants of the IPOs shows that both the underwriters' prestige and the times of oversubscription significantly affect the underpricing level of the IPOs over the most important and hot period for the Greek emerging stock market since its establishment, in terms of growth rates, acceleration of the going public process and volatility of market and stock returns.

Keywords: IPOs, underpricing, oversubscription, underwriters' prestige, Athens Stock Exchange

JEL Classification: G24, G32