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)

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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
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
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

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