Business, Management and Accounting
4 years ago

Australian IPOs underpriced by 25%, impacting investor wealth and market dynamics.

Investment Management and Financial Innovations
New evidence of short-run underpricing in Australian IPOs
Wasantha Perera, Nada Kulendran

Paper Summary

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Australian IPOs are often underpriced in the short term, with first-day prices being significantly lower than their actual value. However, after listing, these IPOs tend to be overpriced. Industrial sector IPOs are more attractive to investors, while chemical and materials sector IPOs are less appealing. Overall, Australian IPOs were found to be underpriced by around 25% on the first day and by about 24% in the days following the listing. Investors should consider both initial and post-listing returns when analyzing IPO performance.