Determinants of Management Earnings Forecasts: The Case of Global Shipping IPOs

Wolfgang Drobetz, Dimitrios Gounopoulos, Anna Merika, Andreas Merikas

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Abstract

This paper uses a unique testing ground on the effect of price limits upon IPO pricing and initial returns. The Athens Stock Exchange offers the opportunity for this new experiment, as three substantial changes in limit regulations were implemented in a short period of eight years. The results indicate significant differences in initial returns. Effective price limits reduce underpricing in all market segments, without visible diminution of IPO activity. The introduction of mandatory book-building after price limits were phased out in Athens also led to reduced underpricing in the main market segment. Nevertheless, the existence of an independent effect of price limits explains why some regulators continue to use them to the present day.
Original languageEnglish
Pages (from-to)975 - 1015
Number of pages41
JournalEuropean Financial Management
Volume23
Issue number5
Early online date18 May 2017
DOIs
Publication statusPublished - 3 Nov 2017

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