Performance of Initial Public Offerings: The Evidence for Switzerland

69 Pages Posted: 20 Feb 2003

See all articles by Wolfgang Drobetz

Wolfgang Drobetz

University of Hamburg

Matthias Kammermann


Urs Waelchli

Rochester-Bern Executive Programs; University of Rochester - Simon Business School

Date Written: January 15, 2003


We examine the underpricing and long-term performance of a broad set of Swiss IPOs from 1983 to 2000. The average market adjusted initial return is 34.97%. Our results support the ex ante uncertainty hypothesis, the signalling hypothesis and, to some extent, the market cyclicality hypothesis as possible explanations for the underpricing phenomenon on the Swiss IPO market. We also find evidence for lower initial returns under increased competition among investment banks, and more accurate pricing when book-building is used. To accurately measure the long-term performance of Swiss IPOs, we use a variety of different methods and adjust for possible biases. In contrast to previous findings for the U.S., we do not find a significant drop or strong continuous underperformance of Swiss IPO stock prices in the aftermarket. If there was any evidence for underperformance at all, Swiss IPOs show poor returns only in the very long-run after 48 months of trading.

Keywords: initial public offerings, underpricing, long-run stock performance, market efficiency, Swiss stock market

JEL Classification: G14, G12, G24

Suggested Citation

Drobetz, Wolfgang and Kammermann, Matthias and Waelchli, Urs, Performance of Initial Public Offerings: The Evidence for Switzerland (January 15, 2003). Available at SSRN: or

Wolfgang Drobetz (Contact Author)

University of Hamburg ( email )

Moorweidenstrasse 18
Hamburg, 20148

Matthias Kammermann

Independent ( email )

Greifenstrasse 13
St. Gallen, SG 9000

Urs Waelchli

Rochester-Bern Executive Programs ( email )

Engehaldenstrasse 4
Bern, 3012

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

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