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Underpricing of initial public offerings: the case of Portugal
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Resumo(s)
This paper analyzes the initial public offering (IPO) underpricing phenomenon in Portugal. We show that the ‘hot issue’ market of 1987, coinciding with a speculative bubble in the stock market, is well explained by investor sentiment theories and that the issuing firms seized a ‘window of opportunity’ provided by excessive demand to offer and list their shares. In IPOs prior to the 1987 crash, underpricing is very high while there is a strong reversion to fundamentals in the long run. In the period 1988–2004, we find lower IPO underpricing and overall no evidence of long-run underperformance of IPO firms. Bookbuilding IPOs are more underpriced than other price setting systems IPOs, and firms with seasoned public offerings show abnormal returns in the long run.
Descrição
Palavras-chave
Hot-Issue Markets Initial Public Offering (IPO) Investor Sentiment Underpricing
Contexto Educativo
Citação
Borges, Maria Rosa .(2007). “Underpricing of initial public offerings: the case of Portugal”, International Advances in Economic Research, Volume 13, Nº 1: pp. 65–80. (Search PDF in 2024).