Research Handbook on International Financial Regulation
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Research Handbook on International Financial Regulation

Edited by Kern Alexander and Rahul Dhumale

The globalisation of financial markets has attracted much academic and policymaking commentary in recent years, especially with the growing number of banking and financial crises and the current credit crisis that has threatened the stability of the global financial system. This major Research Handbook sets out to address some of the fundamental issues in financial regulation from a comparative and international perspective and to identify some of the main research themes and approaches that combine economic, legal and institutional analysis of financial markets.
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Chapter 17: Foreign IPOs: The Experience of Israeli Firms

Iftekhar Hasan and Maya Waisman


Iftekhar Hasan and Maya Waisman Editors’ abstract: Professor Hasan and Dr. Waisman analyse the phenomenon of the underpricing puzzle in initial public offerings (IPOs) of companies which are established and operate in one jurisdiction but which conduct their IPO in another country. The authors analyse the short-term performance of the Israeli IPOs and compare it with that of local US as well as other foreign IPOs. The number of Israeli IPOs in the US was greater than the combined number of IPOs in the US of all other non-US companies between 1985 and 2000, excluding Canada. Using the sample of 728 US, 61 Israeli and 78 other foreign firms, the authors demonstrate substantially lower underpricing by Israeli IPOs compared to the rest of the sample. A formal panel logit regression analysis is employed to confirm this finding. Although the characteristics of this underpricing puzzle have received substantial attention in the literature, this chapter contributes to the understanding of the success and failures of IPOs of companies performing primarily in one market but opting for going public in a different country. INTRODUCTION The last two decades have witnessed an extremely active market for initial public offerings (IPOs) in the US and worldwide, encouraged by the growth of global financial markets and advances in technology. Accordingly, a growing and important body of literature has focused on the characteristics of IPOs, as well as on the phenomenon of underpricing in the US and internationally. While the focus of these studies has been to...

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