Pricing Initial Public Offerings on 'New' European Stock Markets
24 Pages Posted: 16 Jun 2002
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
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