Abstract
We analyze the short- and long-run price performance of 143 global shipping IPOs listed during the 1984–2007 period in major stock exchanges, computing Buy-and-Hold Abnormal Returns (BHARs) and Cumulative Average Returns (CARs). We find the average underpricing for shipping IPOs to be 17.69%. The light underpricing is positively related to the age of the firm, the reputation of the stock exchange the IPO is listed in and the market condition of the period in which the firm went public, and negatively related to the reputation of the underwriters. In the long run, shipping IPOs underperform after a five-month holding period. Specifically, using the BHARs as a benchmark for long-run performance, we reveal that investors who buy immediately after listing and hold shares for 3 years will make a loss of 15.72%. The conclusions suggested by this survey of the global shipping industry surprises us regarding the maturity in the behavior of its investors.
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