The Thrift IPO as the First Stage of its Subsequent Sale

Although the underpricing of initial public offerings (IPOs) has been well documented, the underpricing of foreign IPOs have received relatively little attention. In a comparative analysis of foreign and domestic IPOs in the U.S. market for the 1990-1993 period, we find that for a matched sample, foreign IPOs are significantly more underpriced. Our results are consistent with the models developed by Rock (1986), Beatty and Ritter (1986), and Carter and Manaster (1990). Examination of the characteristics of foreign IPOs reveals that they are more likely to be larger in size, employ more prestigious underwriters and are much more likely to list on the New York Stock Exchange (NYSE).