European sovereign debt crisis and the performance of Dutch IPOs

Dorsman, Andre and Gounopoulos, Dimitrios (2013) European sovereign debt crisis and the performance of Dutch IPOs. International Review of Financial Analysis, 30. pp. 308-319. ISSN 1057-5219

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Abstract

We provide new evidence of the impact of the ongoing deep financial crisis on the performance of Dutch IPOs during the period from January 1990 to May 2012. The findings indicate an increasing level of underpricing as a result of the recent financial crunch. This situation is attributed to the aggressive efforts of underwriters to create demand as well as their strong focus on rewarding investors for their participation. Their actions build the soil for long-term underperformance, a conclusion supported by multiple studies in the literature. Pre-owner loyalty signals the IPOs' quality and promotes compensation by less underpricing. Going public with the aid of a reputable underwriter does not pay off, as it does not reduce the amount of money left on the table. Consistent with the information revelation theory, we argue that the underpricing phenomenon can be largely explained by a general desire for listing.

Item Type: Article
Keywords: Initial public offerings; European Sovereign Debt Crises (ESDC); Long-run share price performance
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences
Depositing User: Janet Snow
Date Deposited: 13 Sep 2013 13:21
Last Modified: 09 Jul 2014 11:58
URI: http://sro.sussex.ac.uk/id/eprint/46177
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