The Long Run Performance of Shipping Initial Public Offerings

Abstract

This paper examines for the first time the performance of Initial Public Offerings (IPOs) in the shipping industry for the initial twenty four months of trading in the secondary market. In the analysis, a sample of 27 shipping IPOs issued in the stock exchanges of seven different countries in the period 1987–1995 is used. Aftermarket performance is measured against the local stock market indices of each IPO and against the Morgan Stanley Capital International (MSCI) index for the shipping equity market. The portfolio of shipping IPOs in the sample underperforms the local stock market indices by as much as 36.79% by the end of the second anniversary of public listing, but there is no evidence of underperformance in relation to the MSCI Shipping index. Furthermore, the two year holding period returns of the dataset are found to be positively related to the initial level of gearing and negatively related to the fleet age of the companies at the time of the offering.