Non-market interaction in primary equity markets: evidence from France and Germany

Michael Stolpe

No 1211, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper provides micro-econometric evidence on the relevance of non-market interaction for the timing of initial public offerings (IPOs) in the French and German primary equity markets. The surge of IPO volume in the late 1990s appears to be consistent with rational expectations, not with adaptive expectations derived from the performance of past IPOs. This finding tends to support the hypothesis that hot issue markets are endogenous and that they may generate large welfare gains by boosting the incentives for technological innovation in start-up firms, potentially creating a self-fulfilling prophecy. A variety of empirical approaches and policy implications are discussed.

Keywords: Initial public offerings; New technology-based firms; Information spillover; Hot issue market; Non-market interaction (search for similar items in EconPapers)
JEL-codes: G12 G14 G18 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1211

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