Underpricing, Risk Management, Hot Issue And Crowding Out Effects: Evidence From The Australian Resources Sector Initial Public Offerings Hoa Nguyen

In this paper, the authors provide a comprehensive investigation of 260 Initial Public Offerings (IPOs) in the Australian resource sector for the 1994 - 2004 periods. Consistent with the existing IPO literature, they document a 16.13% under pricing return by firms in the sample. Despite the contention that risk management can reduce the uncertainty relating to the new issue and hence alleviates the extent of under pricing, they do not find any evidence in support of such contention. In addition to the conventional variables used to explain IPOs under pricing, they further provide evidence that the demand for resources IPOs is not 'crowded-out' by the strength of alternative IPO markets.