The price performance of initial public offerings before and after the financial crisis of 2008 and underpricing phenomenon: An application on Istanbul Stock Exchange

Public offerings that provide external resources to firms can be defined as a sale of stock certificates by invitation and announcement to lots of investors that are unknown in advance. In the year of 2008 there has been a financial crisis occured in our country. Before (the years of 2006 and 2007) and after (the years of 2009 and 2010) the crisis, the initial offerings of the shares to the public examined in this thesis, the periods mentioned in the presence of underpricing cases were investigated. The initial public offerings at pre-crisis period have shown positive average abnormal returns in the short term and the existence of underpricing phenomenon was observed. In this period, the average initial abnormal return of the stocks found to be 8,70 % and -6,91 % at the end of the sixth month. The longer the maturity of underpricing was ineffective has been observed with the reduction in performance of stocks. The initial public offerings at post-crisis period, just like pre-crisis period, have shown positive average abnormal returns in the short term. The presence of the underpricing at the short term has been proven with 5,97 % initial average abnormal return. The underpricing of initial public offerings in the period of 2009-2010, unlike pre-crisis period, continued to exist in the long term. At the and of the sixth month of post-crisis period, the average initial abnormal return of the stocks found to be 16,32 %.