Market Volatility and IPO Filing Activity

Walid Y. Busaba, Yun Li () and Guorong Yang ()
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Walid Y. Busaba: Ivey Business School, Western University, Canada, 1255 Western Road, London, ON N6G 0N1, Canada
Yun Li: Bank of Montreal Financial Group, 100 King Street West, Toronto, ON M5X 1A1 Canada
Guorong Yang: Bank of Montreal Financial Group, 100 King Street West, Toronto, ON M5X 1A1 Canada

Quarterly Journal of Finance (QJF), 2015, vol. 05, issue 04, 1-46

Abstract: The initial public offering (IPO) filing volume is positively related to changes in market volatility, especially when market returns are at ‘normal’ levels. This is consistent with the view that filing with the Securities and Exchange Commission (SEC) gives would-be issuers an ‘option’ on market valuations. Creating this option is attractive not only when market valuations rise but also when volatility increases, and the effect of volatility is more pronounced when market returns are neither high nor low. We therefore identify a distinct type of ‘window of opportunity’ for firms attempting to go public, characterized not particularly by strong stock valuations but by increased volatility in valuations.

Keywords: Initial public offerings; Bookbuilding; Price discovery; Option to withdraw; Option to go public; Market volatility; Market timing (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S2010139215500172

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