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Investor demand for stocks in Initial Public Offerings and their price behaviour after debut. Evidence from Poland

Author

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  • Kamil Gemra

    (SGH Warsaw School of Economics, Collegium of Business Administration, Warsaw, Poland)

  • Piotr Kwestarz

    (Independent researcher, p.kwestarz@strefainwestorow.pl)

Abstract

This article investigates the relationship between investor demand during an IPO and the long-term behaviour of share prices following a company’s stock market debut. Specifically, the study examines the impact of the demand observed during the public offering and the size of the offering on abnormal return rates for a sample of 116 IPOs on the Warsaw Stock Exchange between 2012 and mid-2022. The primary research hypothesis tests whether the medians of abnormal return rates, influenced by these factors, are statistically significant over several time intervals ranging from 3 to 12 months after the debut. The findings confirm that certain information from the completed public offering, particularly the relatively low number of new shares offered, plays a significant role in predicting abnormal changes in share prices during these periods. This research offers valuable insights for investors, emphasising the key factors within the IPO process that can influence the trajectory of share prices following a company’s market debut.

Suggested Citation

  • Kamil Gemra & Piotr Kwestarz, 2024. "Investor demand for stocks in Initial Public Offerings and their price behaviour after debut. Evidence from Poland," Research Papers in Economics and Finance, Poznań University of Economics and Business, vol. 8(2), pages 38-57, December.
    • Handle: RePEc:jbl:ref000:v:8:y:2024:i:2:id:1002
    DOI: 10.18559/ref.2024.2.1002
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    References listed on IDEAS

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    1. Agarwal, Sumit & Liu, Chunlin & Rhee, S. Ghon, 2008. "Investor demand for IPOs and aftermarket performance: Evidence from the Hong Kong stock market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(2), pages 176-190, April.
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