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Initial Public Offerings In Chile

Author

Listed:
  • CRISTIÁN CELIS

    (Part-time Assistant Professor, School of Business, PUC. Resident vice president of Equity Investments, Citicorp Chile)

  • GUSTAVO MATURANA

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

Abstract

This paper studies short- and long-run Initial Public Offering (IPO)performance in Chile. Using both a market index and sector indices as benchmarks, our IPO sample shows significant short-run Cumulative Abnormal Return (CAR) of 4.8% and an insignificant CAR up to 4 years after the initial date. While the proceeds collected are negatively related to short-run underpricing, the quality of the underwriter shows a positive relationship to the same variable. When we classify underwriters as “long term players” or “sporadics”, the former show a significantly higher short-run CAR. These results persist in the long-run CAR but without statistical significance. The regulatory environment and the strength of institutional investors seem to play an important role in determining short-run underpricing in Chile. Timing evidence shows a puzzling negative relation between the market’s P/E ratio and the number of companies going public.

Suggested Citation

  • Cristián Celis & Gustavo Maturana, 1998. "Initial Public Offerings In Chile," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 1(1), pages 7-31.
    • Handle: RePEc:pch:abante:v:1:y:1998:i:1:p:7-31
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    File URL: http://www.abante.cl/files/ABT/Contenidos/Vol-1-N1/1.%20Celis-Maturana.pdf
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    References listed on IDEAS

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    Cited by:

    1. Manuel R. Agosin & Ernesto Pastén H., 2003. "Corporate Governance in Chile," Working Papers Central Bank of Chile 209, Central Bank of Chile.

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    More about this item

    Keywords

    Emerging Markets; Chile;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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