Jain is from Towson State University, and Kini is from Emory University. We are grateful to Tim Loughran, Shehzad Mian, Chris Muscarella, Keith Ord, Jay Ritter, Dennis Sheehan, Greg Waymire, seminar participants at the 1993 Financial Management Association Meetings, the editor (René Stulz), and two anonymous referees for providing helpful comments and suggestions. Janki Kini provided valuable research assistance. We are responsible for any remaining errors.
The Post-Issue Operating Performance of IPO Firms
Article first published online: 30 APR 2012
1994 The American Finance Association
The Journal of Finance
Volume 49, Issue 5, pages 1699–1726, December 1994
How to Cite
JAIN, B. A. and KINI, O. (1994), The Post-Issue Operating Performance of IPO Firms. The Journal of Finance, 49: 1699–1726. doi: 10.1111/j.1540-6261.1994.tb04778.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This article investigates the change in operating performance of firms as they make the transition from private to public ownership. A significant decline in operating performance subsequent to the initial public offering (IPO) is found. Additionally, there is a significant positive relation between post-IPO operating performance and equity retention by the original entrepreneurs, but no relation between post-IPO operating performance and the level of initial underpricing. Post-issue declines in the market-to-book ratio, price/earnings ratio, and earnings per share are also documented.