search query: @indexterm adverse selection / total: 65
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| Author: | Yung, C. Colak, G. Wang, W. |
| Title: | Cycles in the IPO market |
| Journal: | Journal of Financial Economics
2008 : JUL, VOL. 89:1, p. 192-208 |
| Index terms: | stock markets adverse selection initial public offerings models |
| Freeterms: | underpricing delisting rates cross-sectional return variance |
| Language: | eng |
| Abstract: | This paper develops a model in which time-varying (here as: t-var.) real investment opportunities lead to t-var. adverse selection in the market for initial public offerings (IPOs). The model is consistent with several facts known about the IPO market: economic expansions are associated with a dramatic increase in the number of firms going public, which is in turn positively correlated with underpricing. Adverse selection is procyclical. Taking the premise that uncertainty is resolved over time, this hypothesis is tested by looking at long-run abnormal returns and delisting rates. Consistent with the model, there is found a. greater cross-sectional return variance, and b. higher incidence of delisting for hot-market IPOs. |
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