ENGLISH

Information Risk and Long-Run Performance of Initial Public Offerings

By Frank Ecker (auth.)

Book information

Publisher
Gabler Verlag
Year
2009
ISBN
978-3-8349-1259-6, 978-3-8349-8117-2
DOI
10.1007/978-3-8349-8117-2
Language
english
Format
PDF
Filesize
915 kB (937243 bytes)
Edition
1
Pages
132\145
Orientation
yes
Scanned
yes
Time added
2013-08-01 04:00:00
Finance /Banking

Description

There has been an extensive debate in financial economics research on long-term abnormal stock returns following firms’ initial public offerings (IPOs). So far, the discussion has concentrated on long-term underperformance. Frank Ecker examines the performance of U.S. IPOs from 1980 to 2002. He links positive and negative abnormal returns to the deviation of the realized information risk from the expected information risk. The author shows that abnormal returns are significantly negative during the price adjustment process when information risk has initially been underestimated whereas the returns are significantly positive in cases of information risk overestimation. Based on his findings, he proposes effective measures for a long-term profitable investment strategy in IPOs.

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