Underpricing, underperformance and overreaction in initial pubic offerings: Evidence from investor attention using online searches

Arbeitspapier

Online activity of Internet users has proven very useful in modeling various phenomena across wide range of scientific disciplines. In our study, we focus on two stylized facts or puzzles surrounding the initial public offerings (IPOs) - underpricing and long-term underperformance. Using the Internet searches on Google, we proxy the investor attention before and during the day of the offering to show that the high attention IPOs have different characteristics than the low attention ones. After controlling for various effects, we show that investor attention still remains a strong component of the high initial returns (underpricing), primarily for the high sentiment periods. Moreover, we demonstrate that the investor attention partially explains overoptimistic market reaction and thus also a part of the long-term underperformance.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: FinMaP-Working Paper ; No. 35

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy
• Subject: initial public offerings ; Google Trends ; puzzles

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Vakrman, Tomas ; Kristoufek, Ladislav
• Event: Veröffentlichung
• (who): Kiel University, FinMaP - Financial Distortions and Macroeconomic Performance
• (where): Kiel
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/108897
• Last update: 10.03.2025, 11:42 AM CET