Institutional ownership and IPO performance: Australian evidence

Bird, R; Yeung, DC

Institutional ownership and IPO performance: Australian evidence

Bird, R

Yeung, DC

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Publisher:: Financial Management Association
Publication Type:: Conference Proceeding
Citation:: Financial Management Association 2010 Meetings, 2010, pp. 1 - 25
Issue Date:: 2010-01

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Field	Value	Language
dc.contributor.author	Bird, R https://orcid.org/0000-0003-0524-9377	en_US
dc.contributor.author	Yeung, DC https://orcid.org/0000-0002-3032-0449	en_US
dc.contributor.editor	al, AAE	en_US
dc.date	2010-10-20	en_US
dc.date.issued	2010-01	en_US
dc.identifier.citation	Financial Management Association 2010 Meetings, 2010, pp. 1 - 25	en_US
dc.identifier.uri	http://hdl.handle.net/10453/16682
dc.description.abstract	The duo IPO anomalies of underpricing and long run underperformance have inspired a plethora of studies. Yet few have examined the impact of majority investors in IPOs, namely institutional investors. Consistent with previous studies, we found large underpricing which was greatest in those issuers with the highest initial institutional ownership. Yet these issuers experienced the worst long ]run underperformance which casts doubts over the informed ]trading hypothesis. The findings are consistent with overreactions driven by informational cascade in the IPO market. High level of initial institutional interests generates informational herding that drives these issuers f prices beyond the fundamental. Over time, market correction leads to the long ]run underperformance. Our results cast a somewhat different light on institutions f role in IPOs, rather than being a valuable source of price discovery; Institutions may be a force of destabilization in what is already an event wrath with uncertainty.	en_US
dc.publisher	Financial Management Association	en_US
dc.relation.ispartof	Financial Management Association 2010 Meetings	en_US
dc.relation.ispartof	Financial Management Association Annual Meeting	en_US
dc.title	Institutional ownership and IPO performance: Australian evidence	en_US
dc.type	Conference Proceeding
utslib.location	New York, USA	en_US
utslib.location.activity	New York, USA	en_US
utslib.for	150103 Financial Accounting	en_US
dc.location.activity	New York, USA	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
utslib.copyright.status	open_access
pubs.consider-herdc	true	en_US
pubs.place-of-publication	New York, USA	en_US
pubs.start-date	2010-10-20	en_US

Abstract:

The duo IPO anomalies of underpricing and long run underperformance have inspired a plethora of studies. Yet few have examined the impact of majority investors in IPOs, namely institutional investors. Consistent with previous studies, we found large underpricing which was greatest in those issuers with the highest initial institutional ownership. Yet these issuers experienced the worst long ]run underperformance which casts doubts over the informed ]trading hypothesis. The findings are consistent with overreactions driven by informational cascade in the IPO market. High level of initial institutional interests generates informational herding that drives these issuers f prices beyond the fundamental. Over time, market correction leads to the long ]run underperformance. Our results cast a somewhat different light on institutions f role in IPOs, rather than being a valuable source of price discovery; Institutions may be a force of destabilization in what is already an event wrath with uncertainty.

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http://hdl.handle.net/10453/16682