• Initial Public Offering (IPO);
  • underpricing;
  • underperformance;
  • long-run returns and signalling

Abstract:  Academic research into firms that have gone public has focused on the study of two anomalies: initial underpricing and long-run underperformance. We analyse Spanish Initial Public Offerings to provide additional evidence on the long-run performance of IPOs and its relationship with initial underpricing. Results reveal the existence of negative long-run abnormal stock returns, in line with the international literature. Long-run performance presents a positive relationship with underpricing and the volume of funds obtained in seasoned offerings, in consonance with the predictions of Allen and Faulhaber (1989), Welch (1989) and Grinblatt and Hwang (1989).