Post-Dotcom IPOs In Germany: After Crisis Developments In Underpricing

Abstract

After the dotcom-breakdown in 2000, German IPOs came to a sudden standstill and recovery took several years. Empirical evidence on German IPO activities so far focused mostly on the preceding new economy bubble. In contrast, this contribution aims at investigating the post-dotcom IPO market in Germany, using a sample of 182 IPOs between March 2002 and April 2011. The influences of private equity investors, underwriters and the market segment on the flotation are analyzed. Subsequently, driving factors of underpricing are identified. Our results indicate that especially offering characteristics affect underpricing. Furthermore, the companys age and the industry have a significant impact. Private equity investors, major underwriters and the market segment lost their empirically observable influence on underpricing. For the post-dotcom market environment, the results show a shift towards other hot-issue industries, a cooling down of investor sentiments and no significant reduction in ex-post uncertainty concerning new market segments.