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IPO Market Cycles: Bubbles or Sequential Learning?Michelle LowryPennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration G. William SchwertUniversity of Rochester - Simon School; National Bureau of Economic Research (NBER) October 2000 NBER Working Paper No. w7935 Abstract: We examine the strong cycles in the number of initial public offerings (IPOs) and in the average initial returns realized by investors who participated in the IPOs. At the aggregate level, initial returns are predictably related to past initial returns and also to future IPO volume from 1960-1997. To understand these patterns, we use firm-level data from 1985-97 to model the initial return. Our results show that aggregate IPO cycles occur because of the time it takes to complete an IPO, the clustering of similar types of IPOs in time, and information spillovers among IPOs.
Number of Pages in PDF File: 35 working papers seriesDate posted: September 30, 2000Suggested CitationContact Information
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