THE LONG-TERM PERFORMANCE OF INITIAL PUBLIC OFFERINGS ON EUROPE’S NEW STOCK MARKETS

Giancarlo Giudici and Peter Roosenboom

A chapter in The Rise and Fall of Europe's New Stock Markets, 2004, pp 329-354 from Emerald Group Publishing Limited

Abstract: In this chapter we examine the determinants of the long-run stock price performance of Initial Public Offerings (IPOs) on Europe’s new stock markets. We report that the average company that went public on these markets has been a very poor long-term investment. We find that the stock price performance during a three-year window is inversely related to first-day returns. We also find that the long-term underperformance of IPO firms begins after the lock-up agreement has expired and insiders start trading in the firm’s shares. These findings are consistent with the divergence of opinion hypothesis of Miller (1977).

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afeczz:s1569-3732(04)10012-1

DOI: 10.1016/S1569-3732(04)10012-1

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