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The cross-section of European IPO returns

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  • Schuster, Josef Anton

Abstract

Continental European markets and Sweden during a period characterized by dramatic change. For a sample of 973 IPOs during 1988 and 1998, there is considerable underpricing which is time-varying and related to company characteristics. Much of the large "amounts of money left on the table" is due to privatization issues. For the sample as a whole, IPOs did not underperform in the long-run. Over shorter measurement horizons, we find overperformance. IPO performance is sensitive to market condition at the time of going public and IPO issuing characteristic. The favourable performance for the sample as a whole is driven by New Economy IPOs accounting for 28 percent of the sample. The pervasiveness of the outperformance of New Economy IPOs sheds light on the drivers behind the dramatic shift in industry composition of European IPOs in favor of New Economy IPOs during the "Internet Bubble".

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  • Schuster, Josef Anton, 2003. "The cross-section of European IPO returns," LSE Research Online Documents on Economics 24859, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:24859
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    File URL: http://eprints.lse.ac.uk/24859/
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    Cited by:

    1. Schuster, Josef Anton, 2003. "IPOs: insights from seven European countries," LSE Research Online Documents on Economics 24860, London School of Economics and Political Science, LSE Library.
    2. Josef Schuster & Jinhui Luo, 2003. "Management Behaviour and Market Response," FMG Discussion Papers dp462, Financial Markets Group.

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    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • J1 - Labor and Demographic Economics - - Demographic Economics

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