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This paper provides empirical evidence on initial public offerings (IPOs) by investigating the pricing and long-run performance of IPOs on the German capital market before World War I. Our results indicate that even though significant underpricing of IPOs has existed, it is considerably lower than that observed on today's markets. Employing a mixture of distributions approach we also find evidence of price stabilization of IPOs. In our sample long-run underperformance is not significant from zero, neither when calculated on the basis of buy-and-hold returns nor on the basis of calendar time portfolios. Finally, we find no evident impact of a changing institutional setting on underpricing and long-run performance after the establishment of a tighter stock market regulation.

Has There Always Been Underpricing and Long-Run Underperformance? - IPOs in Germany Before World War I