The valuation of spanish iposefficiency analysis

Laburpena

The aim of this paper is to analyze the efficiency of the pricing process of firms that went public on Madrid Stock Exchange during the period 1985-1997. Results show that underwriters do not fully incorporate all the available information. Both prior market returns and some of the firm- and deal-specific characteristics are significantly related to the price update. We find that underwriters similarly disregard some private information when they set the final offer price. However, it seems that underwriters incorporate the vast majority of public information into the final offer price. Thus, underwriters´ treatment of private information appears to be consistent with an efficient IPO pricing process at the semistrong form in the Spanish capital market.