Are IPOs really underpriced?

• 成果类型: Article
• 署名作者: Purnanandam, AK; Swaminathan, B
• 署名单位: Cornell University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhg055
• 发表日期: 2004
• 页码: 811
• 关键词: initial public offerings; long-run performance; stock returns; MARKET; RISK; heteroskedasticity; UNDERPERFORMANCE; persistence; INVESTMENT; EXPIRATION

摘要

While IPOs have been underpriced by more than 10% during the past two decades, we find that in a sample of more than 2,000 IPOs from 1980 to 1997, the median IPO was significantly overvalued at the offer price relative to valuations based on industry peer price multiples. This overvaluation ranges from 14% to 50% depending on the peer matching criteria. Cross-sectional regressions show that overvalued IPOs provide high first-day returns, but low long-run risk-adjusted returns. These overvalued IPOs have lower profitability, higher accruals, and higher analyst growth forecasts than undervalued IPOs. Ex post, the projected high growth of overvalued IPOs fails to materialize, while their profitability declines from pre-IPO levels. These results suggest IPO investors are deceived by optimistic growth forecasts and pay insufficient attention to profitability in valuing IPOs.