Ownership structure and initial public offerings in Portugal

• Autor(a) principal: Duque, João
• Data de Publicação: 2005
• Outros Autores: Almeida, João Miguel
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.5/23511
• topic: IPO; Abnormal Returns; Market Efficiency; Event Studies

This study aims to answer three different questions. First, whether we could observe short-term abnormal return anomaly or long-term underperformance in IPOs of a small economy. Second, if these anomalies do appear to exist, whether they are distinct when ownership categories (private versus state owned) are compared. Third, if these categories show different patterns, whether private placements show significantly different under/overpricing phenomena compared with placements made by state owned companies. In order to do this, we selected the Portuguese market to test whether cumulative abnormal returns (CARs) or the wealth relative (WR) of a set of portfolios were statistically and significantly different from zero. We found significant short-term abnormal returns both for IPOs placed by private firms and for IPOs placed by state owned firms. In addition, state owned IPOs have been more profitable for short-term investments than private IPOs. Secondly we observed weak signs for one-year time period underperformance, but we found new evidence, as reported in the literature, for significant differences for one-year performance according to the ownership structure. Contrary to what the literature on economic and financial performance of privatized firms would lead us to expect, we found that IPOs placed by private companies tend to perform better in a one-year term than IPOs placed by state owned firms. However our results are quite sensitive to the methodology being used.