IPO Market Cycles: Bubbles or Sequential Learning?
Article first published online: 17 DEC 2002
The American Finance Association 2002
The Journal of Finance
Volume 57, Issue 3, pages 1171–1200, June 2002
How to Cite
Lowry, M. and Schwert, G. W. (2002), IPO Market Cycles: Bubbles or Sequential Learning?. The Journal of Finance, 57: 1171–1200. doi: 10.1111/1540-6261.00458
- Issue published online: 17 DEC 2002
- Article first published online: 17 DEC 2002
- Cited By
Both IPO volume and average initial returns are highly autocorrelated. Further, more companies tend to go public following periods of high initial returns. However, we find that the level of average initial returns at the time of filing contains no information about that company’s eventual underpricing. Both the cycles in initial returns and the lead-lag relation between initial returns and IPO volume are predominantly driven by information learned during the registration period. More positive information results in higher initial returns and more companies filing IPOs soon thereafter.