Reassessing the long-term performance of Indian IPOs

Abstract

The study investigates the long-term performance of 250 Indian IPOs issued during the period from 2000 to 2006. The empirical analysis documents significant long-run overperformance of IPO stocks when the abnormal returns are measured using the buy- and-hold abnormal return (BHAR) methodology. However, the magnitude of this anomaly is markedly reduced when the calendar time portfolio approach is used to measure the abnormal performance. In fact, the t-statistics produced by standardized calendar time approach (SCTA) are not even statistically significant when the investment periods are three and five years. SCTA further reports that anomalies tend to disappear for value-weighted portfolios.