Leaders and followers in hot IPO markets

Banerjee, S., Gucbilmez, U. and Pawlina, G. (2016) Leaders and followers in hot IPO markets. Journal of Corporate Finance, 37, pp. 309-334. (doi: 10.1016/j.jcorpfin.2016.01.004)

Abstract

We model the dynamics of going public within an IPO wave. The model predicts that firms with better growth opportunities can find it optimal to go public early and accept underpricing of their issues to signal quality. Data supports this prediction as, on average, early movers underprice their issues significantly more and we show that leaders (early movers with high underpricing) obtain much higher valuations when going public than other IPO firms. Furthermore, after going public, leaders invest significantly more, their sales grow faster, and their profitability remains higher compared to other IPO firms.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Gucbilmez, Dr Ufuk
• Authors: Banerjee, S., Gucbilmez, U., and Pawlina, G.
• College/School: College of Social Sciences > Adam Smith Business School > Management
• Journal Name: Journal of Corporate Finance
• Publisher: Elsevier
• ISSN: 0929-1199
• ISSN (Online): 1872-6313
• Published Online: 19 January 2016
• Copyright Holders: Copyright © 2016 Elsevier B.V
• First Published: First published in Journal of Corporate Finance 37:309-334
• Publisher Policy: Reproduced in accordance with the publisher copyright policy