The Determinants of Underpricing: Initial Public Offerings on the Neuer Markt and the Nouveau Marché (download PDF 230 Kb)

Andrea Schertler, March 2002

Abstract
This paper analyses the determinants of underpricing of firms that went public on the Nouveau Marché between 1996 and 2000 and on the Neuer Markt between 1997 and 2000. Evidence suggests that firms that went public on the Nouveau Marché experienced lower underpricing than their counterparts that went public on the Neuer Markt. This difference in underpricing is partly explained by the differential performance of the two stock markets. The stock market performance has a positive significant impact on underpricing in both markets. However, the impact is stronger in the sample of the Neuer Markt than in the sample of the Nouveau Marché. Moreover, underwriter reputation lowers the underpricing of firms in the sample of the Neuer Markt, while underwriter reputation does not affect the underpricing of firms in the sample of the Nouveau Marché.

Keywords: Underpricing, initial public offering, Neuer Markt, Nouveau Marché.

JEL classification: G32