DP10558 The Berlin Stock Exchange in Imperial Germany ? a Market for New Technology?

Author(s): Sibylle Lehmann, Jochen Streb
Publication Date: April 2015
Keyword(s): industrialisation, innovation, IPO, stock exchange
JEL(s): G14, N23
Programme Areas: Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10558

Analysing 474 cases of firms going public in the German capital between 1892 and 1913, we show that innovative firms could rely on the Berlin stock market as a source of financing. The data also reveal that initial public offerings (IPO) of innovative firms were characterized by particularly low underpricing, comparatively high first trading prices, and no long-run underperformance. We interpret these empirical results as evidence for the surprising fact that contemporary investors had rational expectations.