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

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. (JEL G14, N23)

The quest for status and R&D-based growth

“…For extensive surveys see Gancia and Zilibotti (2005) and Aghion and Howitt (2005). 5 See, for example, Lehmann-Hasemeyer and Streeb (2016) for the importance of the stock market for innovative firms.…”

Deutschland in der ersten Globalisierung

“…Eine wichtige Rolle spielte hier das weiterhin enorme Reservoir einer mobilen Landbevölkerung. Aber langfristig waren wohl die Fähigkeit der deutschen Börsen, Risikokapital bereitzustellen (Lehmann-Hasemeyer und Streb, 2016), ein leistungsfähiges und mit der Industrie vernetztes Bildungssystem und auch Deutschlands geografi sche Lage entscheidend für den Erfolg der ersten Globalisierung. (Stolper et al, 1964, 55;Webb, 1980…”

Money, Banking, and Old-School Historical Economics

“…In examining the development of the Amsterdam Stock Exchange in the 18th century, Jonker (2004, 2011) challenges the widely held view-based on the English examplethat a liquid market for public debt was necessary for the development of financial markets. Lehmann-Hasemeyer and Streb (2016) shows the importance of the Berlin Stock Exchange in financing innovative technologies in a country previously characterized as bank-based. In the 19th century, large banks and the development of the stock exchange were not contradictory.…”