European Sovereign Debt Crisis and the Performance of Dutch IPOs

Andre Dorsman, Dimitrios Gounopoulos

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We provide new evidence of the impact of the ongoing deep financial crisis on the performance of Dutch IPOs during the period from January 1990 to May 2012. The findings indicate an increasing level of underpricing as a result of the recent financial crunch. This situation is attributed to the aggressive efforts of underwriters to create demand as well as their strong focus on rewarding investors for their participation. Their actions build the soil for long-term underperformance, a conclusion supported by multiple studies in the literature. Pre-owner loyalty signals the IPOs’ quality and promotes compensation by less underpricing. Going public with the aid of a reputable underwriter does not pay off, as it does not reduce the amount of money left on the table. Consistent with the information revelation theory, we argue that the underpricing phenomenon can be largely explained by a general desire for listing
Original languageEnglish
Pages (from-to)308 - 319
Number of pages12
JournalInternational Review of Financial Analysis
Early online date10 Jul 2013
Publication statusPublished - Dec 2013


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