The Market Performance of Initial Public Offerings in the Istanbul Stock Exchange
AbstractThis study examines the long-standing IPO performance in the Istanbul Stock Exchange (ISE) by using new factors such as source of shares (new issue or sale of large shareholders), allocation of shares and dispersion of investors as well as existing factors such as market conditions (hot/cold), underwriters’ reputation, and firm characteristics (firm size, E/P, and B/M ratios) in the period of 1990-2000. Our results differ from the previous studies at least three ways. First, the magnitude of underpricing is significantly lower, while underperformance is higher than those of in other studies. Our strong evidence supports the existence of the underpricing by positive initial excess returns (5.94%) and the long-term underperformance up to three-year holding period (-84.5%) in the ISE. Second, underperformance starts much earlier than in other markets i.e. at the end of first month following the IPO because of myopic behavior of investors seeking short-term returns. Third, the underperformance disappears for IPOs made in a cold market, and those made through the sale of large shareholders. Allocation of shares in an IPO and firm size also impact after-market performance of shares
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Bibliographic InfoArticle provided by Banking Regulation and Supervision Agency in its journal Journal of Banking and Financial Markets.
Volume (Year): 2 (2008)
Issue (Month): 2 ()
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Initial Public Offerings; Underperformance; Underpricing; Market Efficiency; Emerging Markets;
Find related papers by JEL classification:
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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