Collateral regulation and IPO-specific liberalization: the case of price limits in the Athens stock exchange

Thomadakis, Stavros, Gounopoulos, Dimitrios, Merikas, Andreas and Nounis, Christos (2014) Collateral regulation and IPO-specific liberalization: the case of price limits in the Athens stock exchange. European Financial Management. ISSN 1354-7798

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Abstract

This paper uses a unique testing ground on the effect of price limits upon IPO pricing and initial returns. The Athens Stock Exchange offers the opportunity for this new experiment, as three substantial changes in limit regulations were implemented in a short period of eight years. The results indicate significant differences in initial returns. Effective price limits reduce underpricing in all market segments, without visible diminution of IPO activity. The introduction of mandatory book-building after price limits were phased out in Athens also led to reduced underpricing in the main market segment. Nevertheless, the existence of an independent effect of price limits explains why some regulators continue to use them to the present day.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences > HG Finance > HG4501 Investment, capital formation, speculation > HG4538 Foreign investments
Depositing User: Dimitrios Gounopoulos
Date Deposited: 02 Jun 2014 08:58
Last Modified: 06 Mar 2017 04:54
URI: http://sro.sussex.ac.uk/id/eprint/48851

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