Initial Public Offerings
Posted: 19 Jun 2002
This paper investigates the underpricing and long-run performance of Initial Public Offerings (IPOs), using a unique sample consisting of 54 British, French and Swedish property companies, which became publicly listed during the period 1984-1999. Similar to common stock IPOs, the European property share IPOs in our sample outperformed the benchmark on the first day of trading, on average with 2.55%. However, these property share IPOs tend to underperform their benchmark over the twelve-month period subsequent to the initial offering. We also examine explanatory factors such as issue size, the degree of debt financing, ex-ante uncertainty, and the underlying property types of the companies involved. The results are in line with those previously found for common stocks.
Keywords: IPO underpricing, equity issues, property companies
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