An empirical investigation of initial public offering (IPO) price performance

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" An empirical investigation of initial public offering (IPO) price performance "
Zachary Alexander Smith M. Sharifzadeh

Document Type	:	Latin Dissertation
Language of Document	:	English
Record Number	:	54822
Doc. No	:	TL24776
Call number	:	‭3325352‬
Main Entry	:	Zachary Alexander Smith
Title & Author	:	An empirical investigation of initial public offering (IPO) price performance\ Zachary Alexander Smith
College	:	Walden University
Date	:	2008
Degree	:	Ph.D.
student score	:	2008
Page No	:	143
Abstract	:	For decades, researchers have disagreed on the magnitude and predictability of abnormal securities' price performance generated by initial public offerings (IPOs). The problem researched in this study was (a) whether IPOs generate abnormal price performances during their initial years of public trading and (b) if IPOs systematically generate abnormal price performance, then the identification of predictable abnormal price performance is in conflict with the theory of market efficiency. The purpose of this study was to identify the best specified and most powerful method of abnormal performance detection and apply that method to examine the price performance of IPOs. Matched by size, industry, and book-to-market ratios this study explored which of the resulting seven portfolios and matched-firm methods of abnormal performance detection produced the best specified and most powerful test statistics. Additionally it considers if IPOs generate abnormal performance. The researcher used the event study approach for the research design along with the buy and hold abnormal return (BHAR) method of aggregating returns to conduct this analysis. The findings were that (a) all of the matched-firm methods of abnormal performance detection were best specified and most powerful and (b) the IPOs generated statistically significant abnormal price performances in all of the hypotheses tested. These findings are in conflict with the theory of market efficiency and imply the existence of social injustice in the IPOs' premarket pricing and allocation process. Revisions to the IPO premarket pricing and allocation method may lead to significant positive social change; the revisions could prevent unfair advantages gained by those investors with privileged premarket IPO allocations and could provide equal opportunities for investors to benefit from the IPO process.
Subject	:	Social sciences; Event study; IPO performance; Initial public offering; Lockup period; Price performance; Quiet period; Short- and long-term abnormal performance; Specification and power analysis; Finance; Studies; Initial public offerings; 0508:Finance
Added Entry	:	M. Sharifzadeh
Added Entry	:	Walden University