The Impact of Media Exposure and Market Psychology on the Underpricing of Initial Public Offerings: The UK Case

20 Pages Posted: 9 May 2004

See all articles by Christos Staikouras

Christos Staikouras

Athens University of Economics and Business - Department of Accounting and Finance

Dimitris Tsatsanis

City University - Cass Business School

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Abstract

The paper examines the relationship between the UK companies' first day returns from Initial Public Offerings (IPO) that took place on London Stock Exchange during the period January 1997 - May 2002 and the media exposure they received prior to their listing. Our results indicate that there is a systematic relationship between the variables capturing the market sentiment surrounding an IPO and its first day returns. The underpricing of an IPO candidate follows its recent IPOs' level of underpricing only before the tech-crash. Also, on average, big companies offer lower first day returns and small companies raise relatively more money when going public.

Keywords: IPOs; underpricing, market psychology, LSE

JEL Classification: G12, G14

Suggested Citation

Staikouras, Christos and Tsatsanis, Dimitris, The Impact of Media Exposure and Market Psychology on the Underpricing of Initial Public Offerings: The UK Case. EFMA 2004 Basel Meetings Paper; Cass Business School Research Paper. Available at SSRN: https://ssrn.com/abstract=495383 or http://dx.doi.org/10.2139/ssrn.495383

Christos Staikouras (Contact Author)

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
Athens, 104 34
Greece
+30 210 8203 459 (Phone)

Dimitris Tsatsanis

City University - Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+30 69740 54555 (Phone)

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