Are government-linked IPOs underpriced? A three country privatization effort comparison

Abstract

Underpricing in the case of the initial public offerings of private (nongovernment) firms has been well documented. However, there does not appear to be any systematic study of the price performance of "government-linked" companies or GLCs, which have been "privatized" through public offerings in the stock market. This study examines the hypothesis that the initial public offerings (IPOs) of such companies in the United Kingdom, Singapore, and Malaysia will not only be underpriced, but their degree of underpricing will be relatively greater when compared to firms with no governmental links. The results provide strong support for this hypothesis. Sufficient evidence exists for the hypothesis that initial public offerings (IPOs) of private and non-government affiliated firms are underpriced. Reilly and Hatfield's (1969) report of underpricing of initial public offers (IPOs) in United States has been followed by reports of underpricing in several developed, as well as developing share markets. For example, Davis and Yeomans (1976) reported IPO underpricing Int Entrep Manag J (

On the identification of critical mass in Internet-based services subject to network effects

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