Why are the French so different from the Germans? Underpricing of IPOs on the Euro New Markets

Marc Goergen, Arif Khurshed and Luc Renneboog

International Review of Law and Economics, 2009, vol. 29, issue 3, 260-271

Abstract: We study the underpricing of firms listed on the two largest EuroNM stock exchanges, the Neuer Markt of Germany and the Nouveau Marché of France. We find that the high underpricing in these two markets - contrary to the evidence on the US - is not driven by insiders' selling behaviour. However, the large underpricing is caused by the high degree of riskiness of the issuing firms and by the partial adjustment phenomenon of offer prices to compensate institutional investors for the truthful revelation of their demand for the shares. For France, lock-up agreements act as substitutes to underpricing, but not so for Germany. We also explore the reasons for the large difference in underpricing between the German and the French IPOs: German firms are more underpriced because they are riskier, have larger price revisions, have less stringent VC lock-up contracts, and go public mostly during the hot issue period when the general level of underpricing in all IPO markets is substantially higher.

Keywords: IPOs; Underpricing; Venture; capital; High; technology; European; New; Markets; Lock-up; agreements (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0144-8188(09)00021-0
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Why are the French so Different from the Germans? Underpricing of IPOs on the Euro New Markets (2006)
Working Paper: Why are the French so Different from the Germans? Underpricing of IPOs on the Euro New Markets (2006)
Working Paper: Why are the French so Different from the Germans? Underpricing of IPOs on the Euro New Markets (2006)
Working Paper: Why are the French so Different from the Germans? Underpricing of IPOs on the Euro New Markets (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:29:y:2009:i:3:p:260-271

Access Statistics for this article

International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer

More articles in International Review of Law and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().