A study of the initial returns and the aftermarket performance of initial public offerings of demutualized building societies in the UK

Abstract

This article examines the initial returns and the aftermarket performance of initial public offerings (IPOs) of demutualized building societies in the UK. The size of the IPOs and the unusual features of the process involved allow for the testing of a number of hypotheses developed from established theories regarding IPOs and mutual to stock conversions. In broad terms, the findings of the study are in accordance with the previous literature.

Notes

Menyah et al. (1995) report that the total amount raised over the 11-year period (1981–1991) for Privatisation Initial Public Offerings (PIPOs) was £33 888 million.

Different studies have used initial return periods of differing lengths. A one day period is most commonly used but some studies have used periods of up to 20 days.

Share price data was collected from Datastream.

The FTSE bank index was also used but the results were very similar.