The underpricing of Brazilian IPOs and the adjustment to public and private information

Abstract

JEL Code: G14; G24: G32.This paper examines the underwriters' treatment of information throughout the IPO pricing process based on a sample of Brazilian companies that went public between 2004 and 2011. There is evidence that the offer price partially incorporates the information contained into the Bovespa index during the book-building period, reacting symmetrically to upward and downward movements. The first-day return, as a result, is predictable on the basis of this information. Positive private information disclosed during the book-building period is also partially incorporated into the offer price. Issues priced above the midpoint of the initial price range are associated with higher initial returns. Este artigo examina o tratamento da informação pelo coordenador líder

A Review of IPO Underpricing: Evidences from Developed, Developing and Emerging Markets

“…Underpricing of Mauritius listed IPOs examined by Agathee et al (2012) and found that there is a significant positive association of aftermarket risk level, auditors reputation with high initial return and ex-ante financial strength has negative association with high initial return. Further added the idea of underpricing of IPO in Brazil by Avelino (2013) who examined the treatment of information in IPO pricing process comes from the underwriter in Brazil. It is found that information during book building period effect offer price partially upward or downward.…”

AN ANALISYS OF ECONOMIC AND FINANCIAL PERFORMANCE OF IPOs IN BRAZIL

“…Avelino (2013) Nesse aspecto, os indicadores de liquidez medem a capacidade de pagamento da empresa do curtíssimo prazo ao longo prazo, comparando-se o que será realizável ao que será exigido (MELO; ALMEIDA; SANTANA, 2012). Ou seja, medem a capacidade da empresa arcar com as suas obrigações financeiras.…”

“…Nos anos seguintes, tem-se o desenvolvimento da crise do subprime, que foi uma bolha imobiliária nos EUA que resultou na eclosão de uma crise financeira no âmbito do cenário global (AVELINO, 2013). A crise originou-se nos Estados Unidos e atingiu o mundo, sendo causada por muitos fatores, dentre eles destacamos: "a insolvência dos empréstimos imobiliários subprime, a securitização das hipotecas que estão atreladas a estes créditos e a alavancagem das instituições financeiras" (KREUZBERG; DOCKHORN; HEIN, 2013, p. 5).…”