Do IPOs affect the prices of other stocks? evidence from emerging markets

Matías Braun, Borja Larrain

Research output: Contribution to journalArticlepeer-review

29 Scopus citations

Abstract

We show that the introduction of a large asset permanently affects the prices of existing assets in a market. Using data from 254 initial public offerings (IPOs) in 22 emerging markets, we find that portfolios that covary highly with the IPO experience a decline in prices relative to other portfolios during the month of the issue. The effects are stronger when the IPO is issued in a market that is less integrated internationally and when the IPO is bigger. This evidence is consistent with the idea that shocks to asset supply have a significant effect on asset prices. (JEL G12, G14, G15).

Original languageEnglish
Pages (from-to)1505-1544
Number of pages40
JournalReview of Financial Studies
Volume22
Issue number4
DOIs
StatePublished - Apr 2009
Externally publishedYes

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