Hot IPOs can damage your long-run wealth!

Jerry Coakley, Leon Hadass and Andrew Wood ()

Applied Financial Economics, 2008, vol. 18, issue 14, 1111-1120

Abstract: This article investigates the links between hot markets, venture capital and long-run underperformance using a unique sample of 591 UK IPOs 1985-2003. It finds no evidence for long-run underperformance for the full sample in line with the classical position. However, cumulative abnormal returns are significantly negative in hot markets and the return differential between hot and normal markets is also statistically and economically significant. This return differential holds relative both to the initial period closing price and the offer price and is consistent with issuers using market timing to exploit investor sentiment during hot markets. Finally, the results offer no support for a certification role by venture capitalists.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09603100701564353 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apfiec:v:18:y:2008:i:14:p:1111-1120

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAFE20

DOI: 10.1080/09603100701564353

Access Statistics for this article

Applied Financial Economics is currently edited by Anita Phillips

More articles in Applied Financial Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().