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

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