Premium
Underpricing of Foreign and Domestic IPOs in the U.S. Market: Empirical Evidence
Author(s) -
Francis Bill,
Hasan Iftekhar,
Li Feng
Publication year - 2001
Publication title -
financial markets, institutions and instruments
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 23
eISSN - 1468-0416
pISSN - 0963-8008
DOI - 10.1111/1468-0416.00040
Subject(s) - initial public offering , underwriting , business , monetary economics , stock exchange , sample (material) , stock market , foreign exchange , stock (firearms) , financial system , financial economics , accounting , economics , finance , geography , chemistry , context (archaeology) , archaeology , chromatography
Although the underpricing of initial public offerings (IPOs) has been well documented, the underpricing of foreign IPOs have received relatively little attention. In a comparative analysis of foreign and domestic IPOs in the U.S. market for the 1990‐1993 period, we find that for a matched sample, foreign IPOs are significantly more underpriced. Our results are consistent with the models developed by Rock (1986), Beatty and Ritter (1986), and Carter and Manaster (1990). Examination of the characteristics of foreign IPOs reveals that they are more likely to be larger in size, employ more prestigious underwriters and are much more likely to list on the New York Stock Exchange (NYSE).