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Initial performance of Greek IPOs, underwriter's reputation and oversubscription

Dimitris Kenourgios (), Spyros Papathanasiou and Emmanouil Rafail Melas

Managerial Finance, 2007, vol. 33, issue 5, 332-343

Abstract: Purpose - This paper aims to provide additional international evidence on the initial public offerings (IPOs) by examining the initial performance and two main determinants of short-run underpricing of 169 IPOs listed on the Athens Stock Exchange (ASE) over the period 1997-2002. Design/methodology/approach - In the first stage, the initial performance of the IPOs is measured by two calculated formulas: the raw returns and the excess or adjusted returns of the first, fifth and 21st day, respectively. In the second stage, a proxy is used to rank the underwriters' prestige along with the times of oversubscription, which are introduced as explanatory variables in the model. Findings - The results of the analysis on the initial performance of the IPOs provide evidence of significant underpricing. Furthermore, the cross-sectional analysis on the determinants of the IPOs shows that both the underwriters' prestige and the times of oversubscription significantly affect the underpricing level of the IPOs. Practical implications - This paper helps investors and issuers to understand the role of an underwriter's reputation into the Greek going public process and the underpricing phenomenon and supports that the oversubscription is a pure signal to the investors that the shares are underpriced.

Keywords: Accounting research; Flotation; Pricing; Return on investment; Greece (search for similar items in EconPapers)
Date: 2007
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