Gentlemanly Capitalism Revisited: A Case Study of the Underpricing of Initial Public Offerings on the London Stock Exchange 1946-86

David Chambers ()

No 253, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Allegations of British capital market failure are numerous, range from claims of domestic investor bias before 1914 to charges of short-termism against institutional investors towards the end of the last century, and are frequently contentious. This paper revisits this literature by pointing up the post-1945 IPO market as a clear example of capital market failure. Despite the tender offer method delivering 10% lower underpricing than the dominant IPO method, it was adopted by fewer than 1 in 10 firms going public. This missed opportunity cost issuing firms £1.4 billion in money left on the table between 1960 and 1986 at 2004 prices and can be attributed to a lack of competition among issuing houses and brokers pre-Big Bang.

Keywords: IPO; British capital market failure; Tender offer (search for similar items in EconPapers)
JEL-codes: G24 G34 N24 (search for similar items in EconPapers)
Date: 2007-12-01
New Economics Papers: this item is included in nep-fin, nep-fmk and nep-his
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Citations: View citations in EconPapers (4)

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