Initial returns: underpricing or overvaluation ? Evidence from easdaq and euronm

Sophie Manigart and Wouter De Maeseneire

Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School

Abstract: This paper investigates initial returns of Easdaq and EuroNM IPOs and explains part of these returns. Average first day return of 300 IPOs introduced before October 1, 1999, is 36.01 %. The most significant explanatory variable is the mean return of previous IPOs, indicating that high initial returns are caused by too high first trading prices due to investor overreaction and positive market sentiment. Riskier IPOs present substantially higher initial returns. Venture capitalists are not able to significantly reduce initial returns, nor does size of the IPO influence initial returns. Our results indicate that high initial returns are caused by underpricing as well as overvaluation.

Keywords: underpricing; investor sentiment; IPOs; initial returns (search for similar items in EconPapers)
Pages: 47 pages
Date: 2003-05-12
New Economics Papers: this item is included in nep-eec
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.vlerick.be/en/2748-VLK/version/default/ ... vlgms-wp-2003-11.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.vlerick.be/en/2748-VLK/version/default/part/AttachmentData/data/vlgms-wp-2003-11.pdf [301 Moved Permanently]--> https://www.vlerick.com/en/2748-VLK/version/default/part/AttachmentData/data/vlgms-wp-2003-11.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vlg:vlgwps:2003-11

Access Statistics for this paper

More papers in Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School Contact information at EDIRC.
Bibliographic data for series maintained by Isabelle Vandenbroere ().