INITIAL PUBLIC OFFERINGS IN CHILE

Cristián Celis and Gustavo Maturana ()
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Cristián Celis: Part-time Assistant Professor, School of Business, PUC. Resident vice president of Equity Investments, Citicorp Chile
Gustavo Maturana: Escuela de Administración, Pontificia Universidad Católica de Chile

Abante, 1998, vol. 1, issue 1, 7-31

Abstract: This paper studies short- and long-run Initial Public Offering (IPO)performance in Chile. Using both a market index and sector indices as benchmarks, our IPO sample shows significant short-run Cumulative Abnormal Return (CAR) of 4.8% and an insignificant CAR up to 4 years after the initial date. While the proceeds collected are negatively related to short-run underpricing, the quality of the underwriter shows a positive relationship to the same variable. When we classify underwriters as “long term players” or “sporadics”, the former show a significantly higher short-run CAR. These results persist in the long-run CAR but without statistical significance. The regulatory environment and the strength of institutional investors seem to play an important role in determining short-run underpricing in Chile. Timing evidence shows a puzzling negative relation between the market’s P/E ratio and the number of companies going public.

Keywords: Emerging Markets; Chile (search for similar items in EconPapers)
JEL-codes: G14 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (1)

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