Pricing Initial Public Offerings on 'New' European Stock Markets

24 Pages Posted: 16 Jun 2002

See all articles by Giancarlo Giudici

Giancarlo Giudici

Polytechnic University of Milan - Dipartimento di Ingegneria Gestionale

Peter Roosenboom

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Abstract

In 2000 more companies listed in Europe than in the US. This is mainly due to the success of "new" stock markets designed for high-growth companies. In this paper we analyse a sample of 482 Initial Public Offerings (IPOs), listed on five "new" European stock markets up to March 2001. We investigate the determinants of their first-day returns. We find a mean first-day return (underpricing) equal to +38.09%. Market returns, the IPO firm's risk and price revisions in the premarket are positively related to first-day returns, whereas IPO deal flow shows is inversely related to underpricing. We also show that the Internet euphoria impacts first-day returns.

Keywords: Initial Public Offerings, Underpricing, New European Stock Markets

JEL Classification: G30, G32

Suggested Citation

Giudici, Giancarlo and Roosenboom, Peter, Pricing Initial Public Offerings on 'New' European Stock Markets. EFMA 2002 London Meetings. Available at SSRN: https://ssrn.com/abstract=314275 or http://dx.doi.org/10.2139/ssrn.314275

Giancarlo Giudici (Contact Author)

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

Via Lambruschini 4
Milan, 20156
Italy

Peter Roosenboom

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T09-56
3000 DR Rotterdam
Netherlands
+31 10 40 82255 (Phone)

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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