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Collateral regulation and IPO-specific liberalization: the case of price limits in the Athens stock exchange

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posted on 2023-06-08, 17:27 authored by Stavros Thomadakis, Dimitrios Gounopoulos, Andreas Merikas, Christos Nounis
This paper uses a unique testing ground on the effect of price limits upon IPO pricing and initial returns. The Athens Stock Exchange offers the opportunity for this new experiment, as three substantial changes in limit regulations were implemented in a short period of eight years. The results indicate significant differences in initial returns. Effective price limits reduce underpricing in all market segments, without visible diminution of IPO activity. The introduction of mandatory book-building after price limits were phased out in Athens also led to reduced underpricing in the main market segment. Nevertheless, the existence of an independent effect of price limits explains why some regulators continue to use them to the present day.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

European Financial Management

ISSN

1354-7798

Publisher

Wiley

Department affiliated with

  • Business and Management Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2014-06-02

First Open Access (FOA) Date

2014-06-02

First Compliant Deposit (FCD) Date

2014-06-02

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