Dmitry Kokorev1, Elena Chirkova1
  • 1 National Research University Higher School of Economics, 20 Myasnitskaya Str., Moscow, 101000, Russian Federation

Retail IPO in Emerging Markets

2010. Vol. 14. No. 2. P. 139–159 [issue contents]

In our research we analyze main effects which accompany IPO on emergingmarkets. We focus the attention on such countries as Russia, India, China, Brazil, Poland, Singapore, Malaysia, Egypt and other emerging markets. There are 161 placements in our sample which took place in 11 emerging markets. The major interest involves theeffects accompanying privatization of state companies through IPO and how much retail investors win from participating in IPOs of the companies from emerging markets.

We estimate the dependence of underpicing or initial return IPO (the price changemeasured from the offering price to the market price on the first trading day) andlong-run IPOs performance from such factors as ownership of shares before placing (astate ownership/private property), origin of the company, shares allocation (retail/institutional investors), etc.

Our research has revealed that retail IPO have the greatest initial return, than usual IPO. The hypothesis about the lower long-term yield of such placements in comparison with yield of the market is thus confirmed. Surprisingly, IPOs of the state companies have bigger underpricing (allowing investors to earn more in the first days of the quotations), than private companies IPO. However long-run abnormal return is also positive (at usual IPO it is negative in average) which shows that privatization IPO is a separate phenomenon. Country specific characteristics matter in retail IPO and sometimes the differences are crucial. Most of the peculiarities depend on the distinctions in institutional environment of the countries and the level of retail investors’ participation in IPO. Moreover, countries authorities set various purposes at privatization of the state companies which could also affect IPO performance.
Citation: Kokorev D., Chirkova E. (2010) «Narodnye» IPO na rastushchikh rynkakh kapitala [Retail IPO in Emerging Markets]. Ekonomicheskiy zhurnal VShE, vol. 14, no 2, pp. 139-159 (in Russian)
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