In this chapter we examine the determinants of the long-run stock price performance of Initial Public Offerings (IPOs) on Europe’s new stock markets. We report that the average company that went public on these markets has been a very poor long-term investment. We find that the stock price performance during a three-year window is inversely related to first-day returns. We also find that the long-term underperformance of IPO firms begins after the lock-up agreement has expired and insiders start trading in the firm’s shares. These findings are consistent with the divergence of opinion hypothesis of Miller (1977).
Giudici, G. and Roosenboom, P. (2004), "THE LONG-TERM PERFORMANCE OF INITIAL PUBLIC OFFERINGS ON EUROPE’S NEW STOCK MARKETS", Giudici, G. and Roosenboom, P. (Ed.) The Rise and Fall of Europe's New Stock Markets (Advances in Financial Economics, Vol. 10), Emerald Group Publishing Limited, Bingley, pp. 329-354. https://doi.org/10.1016/S1569-3732(04)10012-1
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