Initial public offerings by mutual thrifts: The regulatory impact

This study analyzes the abnormal returns from a sample of 311 mutual thrift IPOs to investigate the presence of deliberate underpricing and to measure the impact of the changing regulatory environment. The large initial returns are maintained over the following year, indicating deliberate underpricing. Cross-sectional regressions show that the adjusted returns are positively related to the percentage of insiders participating in the IPO and to the size of the conversion. The adjusted returns significantly decrease after regulations are tightened, and there is a rapid rise in adjusted returns when uncertainty is introduced relating to the actual impact of these regulations. (JEL G280)