The performance of initial public offerings in the Mexican stock market, 1987-1993

This paper documents differences in the performance of bank and nonbank initial public offerings (IPOs) in Mexico during 1987-1993. We measure performance relative to the Mexican stock market index. Banks experience much larger initial underpricing than nonbanks due in part to a hot issue market in 1987. In the aftermarket, excess returns for banks, industrials, and services are not significant. Excess aftermarket returns for brokerage houses are significantly negative. We also find that underpricing of the privatized IPOs diminishes over time, supporting the argument that the Mexican government offered discounts on IPOs issued early in the privatization program. (C) 2000 Elsevier Science Ltd. All rights reserved.