Published August 1997
| Submitted
Working Paper
Open
IPO Post-Issue Markets: Questionable Predilections But Diligent Learners?
- Creators
-
Bossaerts, Peter
- Hillion, Pierre
Chicago
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Abstract
Efficiency in the IPO (Initial Public Offering) aftermarket is tested without imposing any restrictions on the priors about potential default at the issue date. Merging Ritter's extended dataset (which covers the period 1975-84) with the CRSP tapes, IPOs are followed up to ten years after issue. Across all IPOs, or when stratifying IPOs according to issue underpricing, industry affiliation or rank of entry in an industry, little evidence against rational price behavior is found. In contrast, the market clearly over-reacts to information about the eventual fate of low-priced issues. A suggestive relationship between irrational price behavior and subsequent takeover activity is uncovered.
Additional Information
Many thanks to Jay Ritter for making his dataset available. Published as Bossaerts, P., & Hillion, P. (2001).. The Review of Economics and Statistics, 83(2), 333-347.Attached Files
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Additional details
- Eprint ID
- 80372
- Resolver ID
- CaltechAUTHORS:20170814-141831110
- Created
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2017-08-15Created from EPrint's datestamp field
- Updated
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2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 1014