SEMINAR IN FINANCE Christian Helmenstein, Gabriel Lee

(Biweekly Mondays)

Monday, 21. April 1997

Wolfgang AUSSENEGG (Technical University of Vienna

Short and Long-Run Performance of IPOs in the Austrian Stock Market

Abstract: This paper investigates the price behaviour of initial public offerings (IPOs) of equities listed on the Vienna Stock Exchange during the period from 1984 to 1996. In accordance with the findings for other markets, the average initial returns of Austrian IPOs are significantly positive. For a total sample of 66 IPOs, an average first day return of 6.5 per cent is documented which is lower than for most other IPO markets. More than a quarter of all IPOs are overpriced with negative initial returns. Several hypotheses to explain the observed unterpricing of Austrian IPOs are tested. The short-run aftermarket performance (first year) is found to be not significantly different from zero, whereas in the long-run (first three years) the total sample of Austrian IPOs underperform benchmark firms. An investor would have had to invest 22 per cent more money in IPOs than in non IPO firms of similar size to have the same wealth three years after the offering date. There is also evidence that the main reason for this underperformance are poorly performing family-owned IPOs.

Place: Institute for Advanced Studies, Stumpergasse 56, 1060 Vienna, SZ VI Time: 17:00h-18:30h Info: http://www.wsr.ac.at/ihs-html/fin/finsem.html =========================================================================