References (36)


Citations (19)



Institutional Versus Individual Investment in Ipos: The Importance of Firm Fundamentals

Laura Casares Field

Pennsylvania State University - Smeal College of Business

Michelle Lowry

Drexel University

November 4, 2005

AFA 2006 Boston Meetings Paper

Over both short and long horizons, IPOs with greater institutional shareholdings outperform those with smaller institutional shareholdings. Over a one-quarter horizon, institutions can identify firms that beat market benchmarks. Over the long-run, however, institutions' advantage lies entirely in their ability to avoid firms that exhibit the worst performance. Institutions appear to rely heavily on readily available firm and offer characteristics when making their investment decisions. In contrast, individual investors are less likely to consider such characteristics and, as a result, they invest disproportionately in poorly performing firms. However, a simple strategy of investing in higher quality firms, for example, firms with positive earnings prior to the IPO, would enable individuals to avoid much of this underperformance.

Number of Pages in PDF File: 47

Keywords: Initial public offerings, institutional investors, individual investors, long-run performance

JEL Classification: G24, G14

Open PDF in Browser Download This Paper

Date posted: November 4, 2004  

Suggested Citation

Field, Laura Casares and Lowry, Michelle, Institutional Versus Individual Investment in Ipos: The Importance of Firm Fundamentals (November 4, 2005). AFA 2006 Boston Meetings Paper. Available at SSRN: http://ssrn.com/abstract=613563 or http://dx.doi.org/10.2139/ssrn.613563

Contact Information

Laura Casares Field (Contact Author)
Pennsylvania State University - Smeal College of Business ( email )
609D BAB I
University Park, PA 16802
United States
818-865-1483 (Phone)
818-865-3362 (Fax)
Michelle B. Lowry
Drexel University ( email )
Philadelphia, PA 19104
United States
215-895-6070 (Phone)
Feedback to SSRN

Paper statistics
Abstract Views: 3,700
Downloads: 663
Download Rank: 24,773
References:  36
Citations:  19

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.531 seconds