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  4. November 2016
  5. The Berlin Stock Exchange in Imperial Germany: A Market for New Technology?

The Berlin Stock Exchange in Imperial Germany: A Market for New Technology?

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Abstract

Analyzing 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. Our 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 in the period of the Second Industrial Revolution the Berlin stock exchange was already a well-functioning market for new technology.

Citation

Lehmann-Hasemeyer, Sibylle, and Jochen Streb. 2016. "The Berlin Stock Exchange in Imperial Germany: A Market for New Technology?" American Economic Review, 106 (11): 3558-76. DOI: 10.1257/aer.20150626

Additional Materials

JEL Classification

  • G14 Information and Market Efficiency; Event Studies; Insider Trading
  • G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
  • G24 Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
  • G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
  • N23 Economic History: Financial Markets and Institutions: Europe: Pre-1913