Long-Term Performance of Initial Public Offerings: The Evidence for Switzerland

24 Pages Posted: 16 Aug 2005

See all articles by Wolfgang Drobetz

Wolfgang Drobetz

University of Hamburg

Matthias Kammermann

Independent

Urs Waelchli

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

Abstract

We estimate the underpricing and long-term performance of Swiss initial public offerings (IPOs) from 1983 to 2000. The average market adjusted initial return is 34.97%. To examine the long-term performance of Swiss IPOs, we compute buy-and-hold abnormal returns, skewness-adjusted wealth ratios, and cumulative abnormal returns using 120 months of secondary market returns. In contrast to previous findings for the U.S. and Germany, we do not find strong evidence for a distinct IPO effect. We attribute long-term underperformance to the fact that IPO firms tend to be small firms. It virtually vanishes when we use a small capitalization index as a benchmark. In spite of distinct economic implications and statistical properties, our basic results are similar for all performance measures applied.

Keywords: Initial Public Offerings, Long-Run Stock Performance, Market Efficiency, Swiss Stock Market, Underpricing

JEL Classification: G14, G12, G24

Suggested Citation

Drobetz, Wolfgang and Kammermann, Matthias and Waelchli, Urs, Long-Term Performance of Initial Public Offerings: The Evidence for Switzerland. Schmalenbach Business Review, Vol. 57, pp. 253-275, July 2005. Available at SSRN: https://ssrn.com/abstract=778907

Wolfgang Drobetz (Contact Author)

University of Hamburg ( email )

Moorweidenstrasse 18
Hamburg, 20148
Germany

Matthias Kammermann

Independent ( email )

Greifenstrasse 13
St. Gallen, SG 9000
Switzerland

Urs Waelchli

Rochester-Bern Executive Programs ( email )

Engehaldenstrasse 4
Bern, 3012
Switzerland

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

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