Orphan Versus Non-Orphan IPOs: The Difference Analyst Coverage Makes

30 Pages Posted: 27 Sep 2012

Date Written: September 20, 2012

Abstract

This paper addresses the question of the importance of analyst coverage for the long-run returns of IPO firms over the period from 1991 to 2010. In US IPOs, during the one- to five-year horizon, we find a significant long-run abnormal performance by orphans (IPOs without analyst coverage) compared to non-orphans (IPOs with analyst coverage). Further analysis reveals that this outperformance by non-orphans stems from high analyst coverage. Our results are robust after accounting for venture capital backing, underwriting syndicates, underpricing, institutional investor ownership, or operating performance variables.

Keywords: IPOs, analyst coverage, long-run performance

JEL Classification: G14, G24

Suggested Citation

Boissin, Romain, Orphan Versus Non-Orphan IPOs: The Difference Analyst Coverage Makes (September 20, 2012). Available at SSRN: https://ssrn.com/abstract=2152864 or http://dx.doi.org/10.2139/ssrn.2152864

Romain Boissin (Contact Author)

University of Montpellier ( email )

Avenue de la Mer Site Richter
163 Rue Auguste Broussonnet
Montpellier, Cedex 2 34090
France

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