Underpricing of Privatised IPOs: The Australian Experience

Ning Gong and Chander Shekhar
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Ning Gong: Melbourne Business School, University of Melbourne, 200 Leicester Street, Carlton, VIC 3053.
Chander Shekhar: Melbourne Business School, University of Melbourne, 200 Leicester Street, Carlton, VIC 3053.

Australian Journal of Management, 2001, vol. 26, issue 2, 91-106

Abstract: We investigate the price performance of initial public offerings (IPOs) of formerly state-owned companies in Australia. On average, privatised IPOs in Australia are underpriced by about 11%, which is not significantly different from the magnitude of underpricing of the privately-owned IPOs and that of privatised share offerings in other OECD countries. While it appears that the magnitude of underpricing is correlated with the size of issues and the party affiliation of the presiding government, cross-sectional analysis of our sample does not support some traditional theoretical explanations of underpricing for privatised IPOs—only the market sentiment prior to the listing is identified as a significant factor in determining the degree of underpricing. We also investigate the impact of a two-tiered pricing structure on the performance of IPOs.

Keywords: INITIAL PUBLIC OFFERINGS; PRIVATISATION (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:26:y:2001:i:2:p:91-106

DOI: 10.1177/031289620102600201

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