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Offering Method and Pricing of IPOs: An Analysis of Stock IPOs in the Netherlands, 1918–1939

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  • Wilco Legierse

    (Erasmus University)

Abstract

Research into the benefits of underwritten issues has been conducted primarily in settings that exhibit information asymmetries between issuing firms, financial intermediaries, and investors. This paper examines, during the interwar period, an era characterized by longstanding relationships between issuers, banks, and investors, the pricing and choice of method for offering shares of Dutch IPOs. Offering method in this setting is related mainly to the volume of the issue open for subscription prior to listing. The larger the volume, the more firms tended towards an underwritten offering. The pricing is found to be unrelated to offering method as well as to variables that theoretically proxy information asymmetries. The relatively low level of underpricing largely fluctuates with past investor sentiment.

Suggested Citation

  • Wilco Legierse, 2023. "Offering Method and Pricing of IPOs: An Analysis of Stock IPOs in the Netherlands, 1918–1939," De Economist, Springer, vol. 171(3), pages 207-238, September.
    • Handle: RePEc:kap:decono:v:171:y:2023:i:3:d:10.1007_s10645-023-09422-2
    DOI: 10.1007/s10645-023-09422-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate finance; Going public; Initial public offering; Underpricing;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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