Abstract
This chapter presents the empirical evidence in relation to three important topics: the initial pricing of initial public offerings (IPOs); their long-run return performance; and the operating performance of firms conducting IPOs. The chapter also presents summary statistics on initial and long-run returns produced by various studies of US IPOs. The chapter reviews empirical findings that explain the influence of various market and firm characteristics as well as institutional factors on the initial and long-run returns of IPOs, respectively. The chapter also discusses the phenomenon of “hot issue” markets and whether IPOs are efficiently priced. The chapter concludes with a presentation and discussion of the findings pertaining to the long-run operating performance of firms following IPOs.
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