The Market Performance of Italian Ipos in the Long-Run

23 Pages Posted: 13 May 2001

See all articles by Roberto Arosio

Roberto Arosio

Polytechnic University of Milan - Dipartimento di Economia e Produzione

Stefano Paleari

University of Bergamo - SIGE Sezione di Ingegneria Gestionale

Giancarlo Giudici

Polytechnic University of Milan - Dipartimento di Ingegneria Gestionale

Date Written: January 2001

Abstract

In most industrialized countries IPOs seem to underperform both the market and portfolios of comparable firms in the long-run, despite the initial underpricing. The reason of this phenomenon are not clearly known. Why should investors buy IPOs shares if probably they will obtain a loss in the long-run, compared to the market portfolio? In this paper, we collect data for a comprehensive sample of 150 IPOs on the Italian Stock Exchange, issued between 1985 and 1999. We analyze the long-run performance, using the market index as referring benchmark. We find that the most recent IPOs do severely underperform the market, while IPOs in the '80s do not exhibit significantly different returns from the other stocks. We also find a significant negative correlation between long run relative performance and initial flipping, this suggesting that some investors possess superior information on IPOs.

Keywords: Long-Run Performance, Initial Public Offerings, Italian Stock Exchange

JEL Classification: G30, G32

Suggested Citation

Arosio, Roberto and Paleari, Stefano and Giudici, Giancarlo, The Market Performance of Italian Ipos in the Long-Run (January 2001). EFMA 2001 Lugano Meetings. Available at SSRN: https://ssrn.com/abstract=269834 or http://dx.doi.org/10.2139/ssrn.269834

Roberto Arosio

Polytechnic University of Milan - Dipartimento di Economia e Produzione ( email )

Piazza Leonardo da Vinci, 32
Milan, 20133
Italy
+39 02 2399 2805 (Phone)
+39 02 2399 2710 (Fax)

Stefano Paleari (Contact Author)

University of Bergamo - SIGE Sezione di Ingegneria Gestionale ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
+39 03 520 52340 (Phone)
+39 03 556 2779 (Fax)

Giancarlo Giudici

Polytechnic University of Milan - Dipartimento di Ingegneria Gestionale ( email )

Via Lambruschini 4
Milan, 20156
Italy

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