Underpricing in a developing capital market: Australian equity issuances, 1920–39

Grant Fleming, Zhangxin Liu, David Merrett, Simon Ville

Research output: Contribution to journalArticlepeer-review


Developing capital markets generally lack the regulatory safeguards and rich informational sources that assist investors in judging new equity issues in modern markets. Focusing on the early stage capital market in interwar Australia, we calculate the success (underpricing and percentage raised) of 786 new equity issues, comparing initial public offerings, seasoned equity offerings, and rights issues. We examine whether the use of underwriters and the choice of security (ordinary or preference shares) affected the success of the equity issue. We find that certification by underwriters had no effect on capital-raising success once we controlled for firm-specific factors in the multivariate regressions, while underpricing and percentage raised varied by type of shares offered to investors.

Original languageEnglish
Pages (from-to)831-855
Number of pages25
JournalEconomic History Review: a journal of economic and social history
Issue number3
Publication statusPublished - 8 Aug 2021


Dive into the research topics of 'Underpricing in a developing capital market: Australian equity issuances, 1920–39'. Together they form a unique fingerprint.

Cite this