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Has there always been underpricing and long-run underperformance? IPOs in Germany before World War I

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  • Schlag, Christian
  • Wodrich, Anja

Abstract

This paper provides empirical evidence on initial public offerings (IPOs) by investigating the pricing and long-run performance of IPOs using a unique data set collected on the German capital market before World War I. Our findings indicate that underpricing of IPOs has existed, but has significantly decreased over time in our sample. Employing a mixture of distributions approach we also find evidence of price stabilization of IPOs. Concerning long-run performance, investors who bought their shares in the early after-market and held them for more than three years experienced significantly lower returns than the respective industry as a whole..

Suggested Citation

  • Schlag, Christian & Wodrich, Anja, 2000. "Has there always been underpricing and long-run underperformance? IPOs in Germany before World War I," CFS Working Paper Series 2000/12, Center for Financial Studies (CFS).
    • Handle: RePEc:zbw:cfswop:200012
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    References listed on IDEAS

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    Cited by:

    1. Zhang Hanbing & Jeffrey E. Jarrett & Xia Pan, 2021. "The Post-IPO Performance in the PRC," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(11), pages 109-109, July.
    2. Huong Dang & Michael Jolly, 2016. "IPOs in New Zealand: Valuation Multiples and Benchmark Adjusted Performance," Working Papers in Economics 16/32, University of Canterbury, Department of Economics and Finance.
    3. Hujer Reinhard & Grammig Joachim & Kokot Stefan, 2000. "Time Varying Trade Intensities and the Deutsche Telekom IPO / Zeitvariable Handelsintensitaten und die Deutsche Telekom IPO," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(6), pages 689-714, December.
    4. Dimitrios Gounopoulos & Johannes Hoebelt, 2013. "Development in financial markets and the performance of German IPOs," Chapters, in: Mario Levis & Silvio Vismara (ed.), Handbook of Research on IPOs, chapter 20, pages 421-462, Edward Elgar Publishing.
    5. Gram, Dennis & Karapanagiotis, Pantelis & Krzyzanowski, Jan & Liebald, Marius & Walz, Uwe, 2021. "An extensible model for historical financial data with an application to German company and stock market data," SAFE Working Paper Series 300, Leibniz Institute for Financial Research SAFE.

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    More about this item

    Keywords

    Initial Public Offerings; Underpricing; Long-Run Underperformance; Prize Stabilization; Impact of Changing Stock-Market Regulation and Institution;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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