IDEAS home Printed from https://ideas.repec.org/p/uts/pwcwps/6.html
   My bibliography  Save this paper

Institutional Ownership and IPO Performance: Australian Evidence

Author

Abstract

The duo IPO anomalies of underpricing and long run underperformance have inspired a plethora of studies. Yet few have examined the impact of majority investors in IPOs, namely institutional investors. Consistent with previous studies, we found large underpricing which was greatest in those issuers with the highest initial institutional ownership. Yet these issuers experienced the worst long-run underperformance which casts doubts over the informed-trading hypothesis. The findings are consistent with overreactions driven by informational cascade in the IPO market. High level of initial institutional interests generates informational herding that drives these issuers’ prices beyond the fundamental. Over time, market correction leads to the long-run underperformance. Our results cast a somewhat different light on institutions’ role in IPOs, rather than being a valuable source of price discovery; Institutions may be a force of destabilization in what is already an event wrath with uncertainty.

Suggested Citation

  • Ron Bird & Danny Yeung, 2010. "Institutional Ownership and IPO Performance: Australian Evidence," Working Paper Series 6, The Paul Woolley Centre for Capital Market Dysfunctionality, University of Technology, Sydney.
    • Handle: RePEc:uts:pwcwps:6
    as

    Download full text from publisher

    File URL: https://opus.lib.uts.edu.au/bitstream/10453/16682/1/2010000478.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alberto Dreassi & Massimiliano Kaucic & Giorgio Valentinuz, 2017. "The Information Content Of Earnings Announcements In The European Insurance Market: An Event Study Analysis," Eurasian Journal of Business and Management, Eurasian Publications, vol. 5(3), pages 1-16.
    2. Keun Jung Lee, 2021. "The Effects of Privatization and Corporate Governance of SOEs in Transition Economies: The Case of Kazakhstan," ADB Institute Series on Development Economics, in: Farhad Taghizadeh-Hesary & Naoyuki Yoshino & Chul Ju Kim & Kunmin Kim (ed.), Reforming State-Owned Enterprises in Asia, chapter 0, pages 113-132, Springer.
    3. Emanuele Teti & Ilaria Montefusco, 2022. "Corporate governance and IPO underpricing: evidence from the italian market," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(3), pages 851-889, September.
    4. Sanjay Dhamija & Ravinder Kumar Arora, 2017. "Determinants of Long-run Performance of Initial Public Offerings: Evidence from India," Vision, , vol. 21(1), pages 35-45, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uts:pwcwps:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Duncan Ford (email available below). General contact details of provider: https://edirc.repec.org/data/pwutsau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.