Initial Public Offerings in Australia 1994 to 1999, Recent Evidence of Underpricing and Underperformance

Initial Public Offerings in Australia 1994 to 1999, Recent Evidence of Underpricing and... This paper analyses whether financial and non financial characteristics of Australian initial public offerings (IPOs) can explain observed underpricing and long term underperformance over the period 1994 to 1999. A number of previous Australian studies have investigated initial day underpricing and longer term underperformance of IPOs and this study updates those papers. We find that initial day underpricing can in part be explained by market sentiment, forecast dividend per share yields, underwriter options and share options. Our longer term analysis supports the finding of previous studies in that IPOs on average, underperform the market in the first year following their listing. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Initial Public Offerings in Australia 1994 to 1999, Recent Evidence of Underpricing and Underperformance

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2004 by Kluwer Academic Publishers
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1023/B:REQU.0000025759.39918.89
Publisher site
See Article on Publisher Site

Abstract

This paper analyses whether financial and non financial characteristics of Australian initial public offerings (IPOs) can explain observed underpricing and long term underperformance over the period 1994 to 1999. A number of previous Australian studies have investigated initial day underpricing and longer term underperformance of IPOs and this study updates those papers. We find that initial day underpricing can in part be explained by market sentiment, forecast dividend per share yields, underwriter options and share options. Our longer term analysis supports the finding of previous studies in that IPOs on average, underperform the market in the first year following their listing.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Oct 2, 2004

References

  • The Use of Warrants as Underwriter Compensation in Initial Public Offerings
    Dunbar, C.G.
  • Differential Information and the Underpricing of Initial Public Offerings: Australian Evidence
    How, J. C. Y.; Izan, H. Y.; Monroe, G. S.
  • The Market's Problems with the Pricing of Initial Public Offerings
    Ibbotson, R. G.; Sindelar, J. L.; Ritter, J. R.
  • The Long-Run Performance of Initial Public Offerings
    Ritter, J. R.

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