We appreciate helpful comments from Bill Christie (the editor), an anonymous referee, and participants at the American Finance Association meetings (2004) and Financial Management Association meetings (2003). We are also grateful for comments from Hsuan-1Chi Chen, Jonathan Clarke, Jay Ritter, and seminar participants at Case Western Reserve University, Curtin University of Technology, National Taiwan University, Texas Tech University, and University of Technology, Sydney. Chan acknowledges the financial support from the National Science Council, Taiwan (NSC 90-2416-H-002-025). The authors accept blame for any remaining errors.
The IPO Derby: Are There Consistent Losers and Winners on This Track?
Article first published online: 15 JUL 2008
2008 Financial Management Association International.
Volume 37, Issue 1, pages 45–79, Spring 2008
How to Cite
Chan, K., Cooney, J. W., Kim, J. and Singh, A. K. (2008), The IPO Derby: Are There Consistent Losers and Winners on This Track?. Financial Management, 37: 45–79. doi: 10.1111/j.1755-053X.2008.00002.x
- Issue published online: 15 JUL 2008
- Article first published online: 15 JUL 2008
We examine the individual and joint relation of discretionary accounting accruals, underwriter reputation, and venture capital backing with the long-run performance of initial public offerings (IPOs). We find that although correlated to some extent, these variables do not manifest the same underlying phenomena in their relation to IPOs' performance. The confluence of the variables is more important than using any one of them individually to identify IPOs that exhibit abnormal long-run stock returns. The combination of their negative aspects helps identify extreme underperformers. We also identify a set of winner IPOs by combining the positive aspects of the three variables.