An analysis of new stock issues in Denmark

John Christensen and Bjarne G. Sörensen

Scandinavian Journal of Management, 1991, vol. 7, issue 2, 123-136

Abstract: In this paper the results of an analysis of the price behaviour in the period immediately after initial public offerings are reported. The specific purpose of this study was to test whether the market can set suitable prices for new stocks instantaneously after the settling, or whether systematically over- or underpricing of new stocks can be observed. The empirical analysis reveals that there seem to be abnormal returns associated with the public offerings. It is not possible to explain this in terms of the general market behaviour. To seek an explanation of the observed behaviour of returns, a bidding model is discussed.

Keywords: Initial; public; offerings; (IPO); market; behaviour (search for similar items in EconPapers)
Date: 1991
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