Leaders and followers in hot IPO markets

Banerjee, Shantanu and Gucbilmez, Ufuk and Pawlina, Grzegorz (2016) Leaders and followers in hot IPO markets. Journal of Corporate Finance, 37. pp. 309-334. ISSN 0929-1199

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Official URL: https://doi.org/10.1016/j.jcorpfin.2016.01.004

Abstract

We model the dynamics of going public within an IPO wave. The model predicts that firms with better growth opportunities can find it optimal to go public early and accept underpricing of their issues to signal quality. Data supports this prediction as, on average, early movers underprice their issues significantly more and we show that leaders (early movers with high underpricing) obtain much higher valuations when going public than other IPO firms. Furthermore, after going public, leaders invest significantly more, their sales grow faster, and their profitability remains higher compared to other IPO firms.

Item Type:

Journal Article

Journal or Publication Title:

Journal of Corporate Finance

Additional Information:

This is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 37, 2016 DOI: 10.1016/j.jcorpfin.2016.01.004

Uncontrolled Keywords:

/dk/atira/pure/subjectarea/asjc/1400/1408

Subjects:

Departments:

Lancaster University Management School > Accounting & Finance

ID Code:

77527

Deposited By:

ep_importer_pure

Deposited On:

07 Jan 2016 09:20

Refereed?: