
8 IPO initial returns on European ‘new
markets’
Giancarlo Giudici and Peter Roosenboom
Abstract
In this chapter we analyze a sample of 532 initial public offerings (IPOs), listed on
European ‘new markets’ up to December 2002. ‘New markets’ are exchanges designed
for high-growth fledging companies. We investigate the determinants of their first-day
returns. We find a mean first-day return (underpricing) equal to ⫹35.7%. Market
returns, the IPO firm’s risk, and price revisions in the premarket are positively related to
first-day returns, whereas IPO deal flow is inversely related to underpricing.
8.1 Introduction
In 2000, more companies listed on European ...