Performance of Initial Public Offerings: The Evidence for Switzerland

The authors examine the underpricing and long-term performance of a broad set of Swiss IPOs from 1983 to 2000. The average market adjusted initial return is 34.97%. Results support the ex ante uncertainty hypothesis, the signalling hypothesis and, to some extent, the market cyclicality hypothesis as possible explanations for the underpricing phenomenon on the Swiss IPO market. They also find evidence for lower initial returns under increased competition among investment banks, and more accurate pricing when book-building is used.