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Initial public offerings (IPOs): The Spanish experience

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  • Rahnema, Ahmad

    (IESE Business School)

  • Fernández, Pablo

    (IESE Business School)

Abstract

This study examines the Spanish IPOs and possible links between a firm's characteristics and the degree of mispricing. The results are consistent with those of similar studies in other countries. Data reveal that the price adjustment process of Spanish IPOs needed, on average, a longer period of time. This study provides evidence that IPOs in the Spanish market have experienced, on average, an underpricing of 11%. In addition, it is possible to reduce the degree of underpricing by selecting the optimum timing, correct underwriter, and type of placement. Handsome returns may be earned by investing in new issues, but liquidating holdings in the first 90 days after the first market price. Our results reveal a low level of efficiency for the Spanish IPO markets over the period of 1986-90.

Suggested Citation

  • Rahnema, Ahmad & Fernández, Pablo, 1993. "Initial public offerings (IPOs): The Spanish experience," IESE Research Papers D/243, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0243
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    File URL: http://www.iese.edu/research/pdfs/DI-0243-E.pdf
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    References listed on IDEAS

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    Cited by:

    1. Terence Tai-Leung Chong & Shuo Yuan & Isabel Kit-Ming Yan, 2010. "An Examination of the Underpricing of H-Share IPOs in Hong Kong," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 13(04), pages 559-582.
    2. Michael Ritchie & William Dimovski & Saikat Sovan Deb, 2013. "Underpricing of infrastructure IPOs: evidence from India," Journal of Property Research, Taylor & Francis Journals, vol. 30(1), pages 24-46, March.
    3. Sheena Chhabra & Ravi Kiran, 2022. "Impact of information on winners' curse and long run performance of initial public offerings," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 975-992, January.
    4. Susana Álvarez & Víctor M. González, 2005. "Signalling and the Long‐run Performance of Spanish Initial Public Offerings (IPOs)," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(1‐2), pages 325-350, January.

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    More about this item

    Keywords

    Public offerings;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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