RESEARCH ARTICLE
Is there still a Berlin Wall in the post‐issue operating performance of European IPOs?*†
First published: 06 January 2017
*
Comments welcome to tppereira@bportugal.pt (+351 96 9416213) or msousa@fep.up.pt (+351 91 4164647). We thank the participants in the 2012 Financial Management Association Annual Meeting, 2012 Multinational Finance Society Conference, and 2012 Portuguese Finance Network Conference for useful comments and valuable suggestions. Finally, financial support from the Portuguese government through the FCT ‐ Fundação para a Ciência e Tecnologia (PEst‐OE/EGE/UI4105/2014 project) is gratefully acknowledged.
†
The views expressed are those of the authors and do not necessarily represent those of the Banco de Portugal or the Eurosystem. Any errors and omissions are the sole responsibility of the authors.
Abstract
This paper studies the post‐IPO operating performance of a sample of 555 European firms that went public between 1995 and 2006. Consistent with previous findings, we observe a decline in post‐issue operating performance of IPO firms. However, firms located in emerging European countries perform even worse after the IPO than firms located in developed European countries. Our results suggest that this less successful post‐issue operating performance by firms located in emerging countries can be explained by a more aggressive use of accruals and a better timing of the IPO in order to coincide with a period of high operating performance.
