Abstract
This paper investigates the change in post-issue operating performance of 300 Indian IPO firms over a three-year period relative to their pre-issue levels. Further, it explores, whether the issuing firms signal their value at the time of issue through underpricing and whether operating performance of issuing firms is reflected in their long-run stock price performance. The accounting ratios have been used as the proxy for the long-run performance of the issuing firms. Using several performance measures, it has been found that IPO firms are not able to sustain the pre-IPO levels of profitability in the after-market period.
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