Underpricing of Privatised IPOs: The Australian Experience

We investigate the price performance of initial public o erings (IPOs) of formally state-owned companies in Australia. On average, privatised IPOs in Australia are underpriced by about 11%, which is not signi cantly di erent from the magnitude of underpricing of the privately-owned IPOs. This percentage is also similar to that of privatised share o erings in other OECD countries. In addition, cross-sectional analysis of our sample does not support some traditional theoretical explanations of underpricing for IPOs. However, it appears that the magnitude of underpricing is correlated to the size of issues and the party a iation of the presiding government. Both authors are from the Melbourne Business School, University of Melbourne, 200 Leicester Street, Carlton, VIC 3053, Australia.