Kiel Working Papers, Kiel Institute for World Economics
No 1211:
Non-Market Interaction in Primary Equity Markets: Evidence from France and Germany
Michael Stolpe
Abstract: This paper provides micro-econometric evidence on the
relevance of non-market interaction for the timing of initial public
offerings (IPOs) in the French and German primary equity markets. The surge
of IPO volume in the late 1990s appears to be consistent with rational
expectations, not with adaptive expectations derived from the performance
of past IPOs. This finding tends to support the hypothesis that hot issue
markets are endogenous and that they may generate large welfare gains by
boosting the incentives for technological innovation in start-up firms,
potentially creating a self-fulfilling prophecy. A variety of empirical
approaches and policy implications are discussed.
Keywords: Initial public offerings, New technology-based firms, Information spillover, Hot issue market, Non-market interaction; (follow links to similar papers)
JEL-Codes: G12,; G14,; G18; (follow links to similar papers)
18 pages, April 2004
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