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The underpricing of Brazilian IPOs and the adjustment to public and private information

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  • Avelino, Ricardo

Abstract

This paper examines the underwriters’ treatment of information throughout the IPO pricing process based on a sample of Brazilian companies that went public between 2004 and 2011. There is evidence that the offer price partially incorporates the information contained into the Bovespa index during the book-building period, reacting symmetrically to upward and downward movements. The first-day return, as a result, is predictable on the basis of this information. Positive private information disclosed during the book-building period is also partially incorporated into the offer price. Issues priced above the midpoint of the initial price range are associated with higher initial returns.

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  • Avelino, Ricardo, 2013. "The underpricing of Brazilian IPOs and the adjustment to public and private information," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 67(1), April.
  • Handle: RePEc:fgv:epgrbe:v:67:y:2013:i:1:a:3851
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