Handbook of Research on IPOs
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Handbook of Research on IPOs

Edited by Mario Levis and Silvio Vismara

The Handbook of Research on IPOs provides a comprehensive review of the emerging trends and directions in the global initial public offerings (IPO) markets. The empirical evidence included in the book covers Europe, the US and the Far East, and presents a truly global perspective of IPO markets around the world and at the different stages of the entire IPO process.
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Chapter 20: Development in financial markets and the performance of German IPOs

Dimitrios Gounopoulos and Johannes Hoebelt


Initial public offerings (IPOs) are part of various controversy discussions in finance, which document mainly three aspects regarding IPO performance. First, the global phenomenon that IPOs tend to be priced at a discount (underpricing). Second, listings of IPOs vary significantly dependent upon certain periods (hot issue markets). Third, it is well documented that IPOs appear to have poor long-term performance. These conclusions were developed in a large body of empirical studies, which have been carried out subsequently in the past. Initially, Ibbotson and Jaffe (1975) presented empirical evidence on underpricing and connected it with the existence of hot and cold issue markets influencing the magnitude of the underpricing. Further, similar pattern were documented by Ritter (1984) analysing the 1980 US-hot issue market and Loughran et al. (1994) at international level, showing that this has not been a single event.

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