Three Anomalies of Initial Public Offerings: A brief Literature Review

Briefing Notes in Economics – Issue No. 58, September/October 2003 Jong-Hwan Yi 9MIT Institute Professor Paul Samuelson,a friend and fellow Nobel Prize winner in1970, said, “Franco Modigliani couldhave been a multiple Nobel winner.When he died he was the greatest livingmacroeconomist …”At the time of my meeting him at theworkshop in April 1998, he would havebeen 80. Listening to his keynote addresswas, for me, an unforgettable experience.It was rich in quality and had incrediblebreadth. The speech had wit and charm inequal measure and filled with freshinsights into what was then a particularlyuncomfortable period in European labourmarkets.As an 80 year old academic, for whomthe Nobel Prize had by then been a 13year-old experience, my colleagues and Iwere expecting a little less passion andcertainly much less combativeness. Wewere in for quite a surprise! During thediscussion sessions that followed the keynote address Professor Modigliani wasgiving as good as he got from the thendeputy Chief Economist of the EBRD,Roberto Largo, and the Research Directorfor Employment at the OECD. The LSEeconomist, Professor Robin Jackman,was struggling to get a word in edgeways.During one of the conference’s quietermoments a colleague asked our illustriousguest about his remaining ambitions.Professor Modigliani said that he wouldvery much like to win the Nobel Prize fora second time … so Professor Samuelsonmay have had a point after all!Professor Samuelson noted that WallStreet was full of experts who had studiedwith Modigliani. His students alsoincluded Nobel laureate Robert Merton,the 1997 winner.“On the day he won the Nobel, weplayed doubles,” Professor Samuelsonhas recalled. “An intense tennis player, henever stopped moving. He was so intense,he once ran into a cement wall trying toget the ball.” Samuelson’s wish tocollaborate with Modigliani came tofruition on a tennis court. “One day,between serves, he asked me what Ithought of a new theory,” Samuelsonsaid. “I admitted I hadn't heard of it. Heexplained it. We kept playing. Iresponded. Our collaboration was bornright there.”“His legendary enthusiasm and intensitynever flagged. He inspired generations ofstudents and colleagues with his passionfor using economics to benefit society.Everyone who knew him will miss him.”Meeting him at Richmond was not justan honour but a real pleasure filled withdeep admiration.(Some of the less personal insights were taken fromhttp://web.mit.edu/newsoffice/nr/2003/modigliani.html)Book Review:Parviz Dabir-AlaiDue to space restrictions the book reviewhas been omitted from this issue of theBNE. This will return with the next issue.Forthcoming Conferences:December 10-12, 2003: The 12 thinternational Tor Vergata conference onBanking and Finance to be held at theUniversity of Rome, Italy. Furtherinformation available from Professor M.Bagella who may be reached viabagella@uniroma2.it and viawww.economia.uniroma2.it/January 3-5, 2004: The annual meetingsof the American Economic Associationwill be held in San Diego, California,USA. Further information available viathe AEA’s website at www.aeaweb.orgFebruary 20-22, 2004: The annualmeetings of the Eastern EconomicAssociation will be held in Washington,D.C., USA. Further information availablefrom the conference organiser Dr MaryLesser who may be reached by e-mail at