IPO market timing. The evidence of the disposition effect among corporate managers

Michal Plotnicki and Adam Szyszka

Global Finance Journal, 2014, vol. 25, issue 1, 48-55

Abstract: Until now, IPO market timing has been mostly associated with a varying number of IPOs in certain periods of “hot” and “cold” issue markets. We would like to offer a different perspective. We focus on a speed of the IPO process, after the decision to go public was actually made. Our hypothesis is that in “hot market” managers will tend to minimize the time necessary to go public in order to take advantage of high valuations as quickly as possible. On the contrary, if the firm is not ready with the IPO on time and in the meantime the market falls during the going-public process, managers will tend to delay the IPO hoping that the good market conditions will come back soon. We argue that such a behavior might be attributed to the disposition effect among firms' managers.

Keywords: Behavioral corporate finance; Initial Public Offering (IPO); Psychology of capital markets; Disposition effect; Corporate managers (search for similar items in EconPapers)
JEL-codes: G02 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:25:y:2014:i:1:p:48-55

DOI: 10.1016/j.gfj.2014.03.005

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