The Rise and Fall of the European New Markets: On the Short and Long-Run Performance of High-Tech Initial Public Offerings

44 Pages Posted: 17 Sep 2003

See all articles by Marc Goergen

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC); Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: September 2003

Abstract

This paper studies the short- and long-run share price performance of firms that have gone public on the Euro New Markets (EuroNMs) since their foundation in 1996/97. The initial and long-run returns are remarkable in four ways. First, underpricing is on average 2-3 times higher than that on the main markets. Second, the proportion of IPOs with negative initial returns is much higher. Third, the long-run buy-and-hold returns and the cumulative abnormal returns are strongly negative and even substantially more negative than longterm returns on the main markets. Fourth, even across EuroNMs, we find large differences in short- and long-run performance. We show that the performance discrepancies can largely be explained by differences in firm and industry characteristics between the various countries involved.

Keywords: initial public offerings, underpricing, long-term performance, stock exchange regulation, listing rules

JEL Classification: G15, G18, G24, G32

Suggested Citation

Goergen, Marc and Khurshed, Arif and McCahery, Joseph A. and Renneboog, Luc, The Rise and Fall of the European New Markets: On the Short and Long-Run Performance of High-Tech Initial Public Offerings (September 2003). Available at SSRN: https://ssrn.com/abstract=443861 or http://dx.doi.org/10.2139/ssrn.443861

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance ( email )

Crawford House
Oxford Road
Manchester, M15 6PB
United Kingdom
+44 0 161 275 4475 (Phone)
+44 0 161 275 4023 (Fax)

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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