Mispricing in IPO Methods and the Predictive Ability of Investors' Interest for New Issues

@inproceedings{Chahine2002MispricingII,
  title={Mispricing in IPO Methods and the Predictive Ability of Investors' Interest for New Issues},
  author={Salim Chahine},
  year={2002}
}
This paper investigates the relationship between underpricing and the investors' interest prior to and after the IPO day. The empirical study, conducted on 305 French issues, shows a first-day abnormal return of 17.13% and a significant mispricing over the three first trading days (a 3-day Cumulative Abnormal Return of 19.15%). Initial underpricing is positively related to the share demand-to-offer ratio in the pre-market period, and to trading volume (scaled by shares issued) in the… CONTINUE READING