I-4\ A persistent anomaly in all industries:
Underpricing is also persistent for all the
industries: automobile, banks, chemicals, construction, financial services,
food and beverages, industrial, machinery, media, pharmaceutical and health,
software, technology, telecommunications, transport and logistics ... Every
firm, which decides to go public, faces the phenomenon of underpricing, the
price of shares the firm sells tends to jump substantially on the first day of
trading regardless its field of activity. Underpricing is persistent for all
the firms no exception of the activity to which the firm belongs.
Oehler, Rummer, and N. Smith (2005) in their article «IPO
Pricing and the Relative Importance of Investor Sentiment, Evidence from
Germany», for a sample of 410 German firms from 1997 to 2001, they
classify the issuing companies by field of activity. When observing the number
of companies going public and the number of companies having a negative first
returns, we can say that most of companies going public have a positive first
day return and then their shares are underpriced regardless the field of
activity and regardless the industry they are belonging to.
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