Three Anomalies of Initial Public Offerings: A brief Literature Review

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Briefing Notes in Economics – Issue No. 58, September/October 2003 Jong-Hwan Yi 6Beatty, Randolph and MichaelVetsuypens, 1995, Under pricing,overpricing and reputation. Areunderwriters penalized for IPO mispricing?Southern Methodist Universityworking paper.Benveniste, Lawrence and Paul Spindt,1989, How investment bankers determinethe offer price and allocation of newissues, Journal of Financial Economics28, 173-207.Brav, Alon and Paul Gompers, 1997,Myth or reality? The long-rununderperformance of initial publicofferings: Evidence from venture andnon-venture capital-backed companies,Journal of Finance 52, 1791-1821.Carter, Richard, Frederick Dark, andAjai Singh, 1998, Underwriterreputation, initial returns, and the longrunperformance of IPO stocks, Journalof Finance 53, 285-311.Carter, Richard and Steven Manaster,1990, Initial public offerings andunderwriter reputation, Journal ofFinance 45, 1045-1068.Dawson, Steven, 1987, Secondarystock market performance of initialpublic offers, Hong Kong, Singapore,and Malaysia: 1978-1984, Journal ofBusiness Finance & Accounting 14, 65-76.Grinblatt, Mark and Chuan Hwang,1989, Signalling and the pricing ofunseasoned new issues, Journal ofFinance 44, 393-420.Hanley, Kathleen, 1993, The underpricing of initial public offerings and thepartial adjustment phenomenon, Journalof Financial Economics 34, 231-250.Ibbotson, Roger, 1975, Priceperformance of common stock newissues, Journal of Financial Economics 2,235-272.Ibboson, Roger and Jefferey Jaffe,1975, ‘Hot issue’ markets, Journal ofFinance 30, 1027-1042.Ibbotson, Roger, Jody Sindelar, and JayRitter, 1988, Initial public offerings,Journal of Applied Corporate Finance 1,37-45.Jegadeesh, Narasimhan, MarkWeinstein and Ivo Welch, 1993, Anempirical investigation of IPO returnsand subsequent equity offerings, Journalof Financial Economics 34, 153-175.Kim, Jeong, Itzhak Krinsky and JasonLee, 1991, Valuation of initial publicofferings and accounting disclosures inprospectuses: Evidence from Korea,International Journal of Accounting 29,46-61.Kunz, Roger and Reena Aggarwal,1994, Why initial public offerings areunder priced: Evidence fromSwitzerland, Journal of Banking andFinance 18, 705-723.Lee, Philip, Stephen Taylor and TerryWalter, 1996, Australian IPO pricing inthe short and long run, Journal ofBanking and Finance 20, 1189-1210.Levis, Mario, Spring 1993, The longrunperformance of initial publicofferings: The UK experience 1980-1988, Financial Management 22, 28-41.Loughran, Tim and Jay Ritter, 1995,The New Issues Puzzle, Journal ofFinance 50, 23-51.Miller, Edward, 1977, Risk,uncertainty, and divergence of opinion,Journal of Finance 32, 1151-1168.Miller, Robert and Frank Reilly, 1987,An examination of mis pricing, returns,and uncertainty for initial publicofferings, Financial Management 16, 33-38.Muscarella, Chris and MichaelVetsuypens, 1989, A simple test ofBaron’s model of IPO under pricing,Journal of Financial Economics 24, 125-135.Ritter, Jay, 1984, The ‘hot issue’market of 1980, Journal of Business 57,215-240.Ritter, Jay, 1991, The long-runperformance of initial public offerings,Journal of Finance 46, 3-27.Rock, Kevin, 1986, Why new issuesare under priced, Journal of FinancialEconomics 15, 187-212.Rydqvist, K., 1993, Initial publicofferings in Sweden and other smallmarkets, Unpublished Stockholm Schoolof Economics working paper.
Briefing Notes in Economics – Issue No. 58, September/October 2003 Jong-Hwan Yi 7Shiller, Robert, 1990, Speculativeprices and popular models, Journal ofEconomic Perspectives 4, 55-65.Smith, Clifford Jr., 1986, Investmentbanking and the capital acquisitionprocess, Journal of Financial Economics15, 3-30.Teoh, Siew, T.J. Wong and Gita Rao,1995, Earnings management and thesubsequent performance of initial publicofferings, UCLA working paper.Tinic, Seha, 1988, Anatomy of initialpublic offerings of common stock,Journal of Finance 43, 789-822.Welch, Ivo, 1989, Seasoned offerings,imitation costs and the under pricing ofinitial public offerings, Journal ofFinance 44, 421-449.Welch, Ivo, 1992, Sequential sales,learning and cascades, Journal ofFinance 47, 695-732.Yi, Jong-Hwan, 1992, A reexaminationof the long-run performanceof initial public offerings, summerresearch paper, University of SouthernCalifornia.Yi, Jong-Hwan, 2001, Pre-offeringearnings and the long-run performance ofIPOs, International Review of FinancialAnalysis 10, 53-67.* Dr. Jong-Hwan Yi is an associateprofessor in finance in the College ofBusiness and Economics at CaliforniaState University, Los Angeles. Hereceived his B.A. and M.A. degrees inEconomics from the University ofChicago and his Ph.D. degree in Financefrom University of Southern California.His teaching and research interestsinclude corporate finance, investmentfinance, stock and operating performanceof IPO firms, and underwriter reputation.❖The views expressed here are personalto the author and do not necessarilyreflect those of the other staff, faculty orstudents of this or any other institution.IN MEMORY: James H. GapinskiWith the approaching of the thirdanniversary of Professor JamesGapinski’s death (author of BNE IssueNo. 21, March 1996) the editor invited aclose friend and colleague of his,Professor Ray Canterbery, to offer a fewwords. The following is an updatedversion of a piece Professor Canterberywrote for the benefit of the Florida StateUniversity community some time ago.… James H. Gapinski, long-timeProfessor of Economics at Florida StateUniversity (FSU), passed away onNovember 20, 2000. His ashes weresprinkled over the Gulf of Mexico at St.George Island where he loved to flykites. He left behind Melissa and Susan,his two devoted daughters. Left behindtoo are the many fellow professors andstudents who respected him for hisresearch, teaching, service, and sunnydisposition. Truly a man for all seasons(sunny or not), everything that he choseto do, he did superbly. His friends knewhim as “Jim” or “Gap.”Although a native of snowy Buffalo,N.Y., Jim had lived in the capital of theSunshine State since 1970. His PhD wasfrom the State University of New York atBuffalo where he was a member of PhiBeta Kappa. His career lofted quicklyfrom the Buffalo tarmac: In his presence,you could almost sense his research andteaching soaring into the blue sky of hightheory. But there was more, much more.Jim authored six books and more than 70articles, many in the top journals ineconomics. Still, the students who lovedlearning remember Professor Gapinskifor his insightful, thoughtful andhumorous teaching style—hisentertaining balancing act betweenresearch and teaching. They alsoremember how patiently he listened totheir questions and remained accessible.Although he was demanding, hemotivated students to rise to his level ofexpectations. His judgments were fair.He radiated an upbeat attitude along with
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Three Anomalies of Initial Public Offerings: A brief Literature Review

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