Long-run stock performance of German initial public offerings and seasoned equity issues
We estimate the long‐run stock performance after initial public offerings (IPOs) in the German capital market with a larger sample than prior studies and alternative benchmarks (the equally and the value‐weighted market portfolio, size portfolios and matching stocks). In addition we present the firs...
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Published in | European financial management : the journal of the European Financial Management Association Vol. 6; no. 2; pp. 173 - 196 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Oxford, UK and Boston, USA
Blackwell Publishers Ltd
01.06.2000
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Subjects | |
Online Access | Get full text |
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Summary: | We estimate the long‐run stock performance after initial public offerings (IPOs) in the German capital market with a larger sample than prior studies and alternative benchmarks (the equally and the value‐weighted market portfolio, size portfolios and matching stocks). In addition we present the first results on the long‐run performance after seasoned equity issues (SEOs) in Germany. We conclude that size portfolios and matching stocks are better benchmarks than market portfolios. Using buy‐and‐hold abnormal returns, we estimate that German stocks involved in an IPO or in a SEO, on average, underperform a portfolio consisting of stocks with a similar market capitalization by 6% in three years. This is considerably less than the underperformance after IPOs and SEOs in the US market reported by Loughran and Ritter (1995) and the underperformance after IPOs in Germany reported by Ljungqvist (1997). We also show that the apparent underperformance of the 1988–1990 IPO cohort discussed by Ljungqvist (1997) disappears when the abnormal performance estimate is based on size instead of market portfolios. |
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Bibliography: | ArticleID:EUFM119 istex:793069DFBC757A73C0FBACF0F35C14A1DE43AA06 ark:/67375/WNG-HJQDXTZ7-8 ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
ISSN: | 1354-7798 1468-036X |
DOI: | 10.1111/1468-036X.00119 |