-DETERMINANTS OF UNDERPICING AND ABNORMAL RETURNS IN EUROPEAN IPOS

This investigation aims to analyse the impact of underpricing and short-term abnormal returns in a sample of IPOs from European Markets between 2014 and 2022. To fulfil the research objectives, an event study was conducted to measure the cumulative abnormal returns up to thirty days after the IPO, followed by four regression analyses to examine the effect of firm and issue-specific characteristics in the levels of underpricing and abnormal returns. The findings show a positive value for underpricing and some significant abnormal returns, mostly negative, in the days following the IPO. Furthermore, the regression analyses indicate no significant impact of the firm-specific characteristics on underpricing and abnormal returns in the current IPOs' sample. However, issue-specific attributes, like offer price and offer size, significantly impacted the levels of underpricing and abnormal returns. These results suggest that issue-specific characteristics seem to be a good risk indicator investors use to analyse investments. The current study contributes to theory and practice by updating the knowledge from previous research on underpricing and short-term abnormal returns on recent IPOs and providing insights into the role of firms and issue-related characteristics.