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Pricing Initial Public Offerings On Europe’S New Stock Markets

In: The Rise and Fall of Europe's New Stock Markets

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  • Giancarlo Giudici
  • Peter Roosenboom

Abstract

In this chapter we investigate whether the pricing of IPOs on Europe’s new stock market differs from that of IPOs on main market segments. We report a 22.3 percentage point difference in the average first-day return of new market IPOs (34.3%) and the average first-day return of main market IPOs (12%). We show that reduced incentives to control wealth losses and different firm and offer characteristics partially explain the higher average first-day return on new market segments. We also find that the bundling of IPO deals has been more important to control underpricing costs on new market than on main market segments.

Suggested Citation

  • Giancarlo Giudici & Peter Roosenboom, 2004. "Pricing Initial Public Offerings On Europe’S New Stock Markets," Advances in Financial Economics, in: The Rise and Fall of Europe's New Stock Markets, pages 25-59, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-3732(04)10002-9
    DOI: 10.1016/S1569-3732(04)10002-9
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