The pricing of initial offerings of privatised companies on the London stock exchange

Kojo Menyah, Krishna N. Paudyal, Charles G. Inyangete

Research output: Contribution to journalArticle

14 Citations (Scopus)

Abstract

This paper investigates UK privatisation issues as initial public offerings (IPOs) of equities on the International Stock Exchange (London). Excess returns on such issues are compared with private sector initial public offerings. The results, which are unaffected by firm size and underwriting commission, indicate that, on an ex post basis, the issues provide excess returns above those of private sector firms on average by about 31% over a 32-week period. None of the existing theories of underpricing of IPOs is consistent with our results which imply wealth transfer to those who acquired the shares in privatised issues. After-market pricing was, however, found to be consistent with secondary market efficiency.

Original languageEnglish
Pages (from-to)51-56
Number of pages6
JournalAccounting and Business Research
Volume21
Issue number81
DOIs
Publication statusPublished - 1 Dec 1990

Keywords

  • privatised companies
  • London stock exchange
  • initial offerings
  • privatisation
  • initial public offerings (IPOs)

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