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Underpricing in Turkey: Comparison of the IPO Methods

Guray Kucukkocaoglu

No 8, Money Macro and Finance (MMF) Research Group Conference 2006 from Money Macro and Finance Research Group

Abstract: This paper addresses the question of what kind of selling and underwriting procedure might be preferred for controlling the amount and volatility of underpricing in the Istanbul Stock Exchange (ISE). Using 1993-2005 firm and issue data, we compare the three substantially different IPO methods available in the ISE. One is very similar to the book building mechanism used in the U.S., another is the fixed price offer, and the third one is the sale through the stock exchange method. The empirical analysis reveals significant first day underpricing of 7.01% in fixed price offer, 11.47% in book building mechanism, and 15.68% in sale through the stock exchange method. Finally, we also show that fixed price offers can better control the impact of market information on underpricing than sale through the stock exchange method

Keywords: ipo; book building; fixed price offer; istanbul stock exchange; emerging market (search for similar items in EconPapers)
JEL-codes: G15 (search for similar items in EconPapers)
Date: 2007-02-02
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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