IPO Market Cycles: Bubbles or Sequential Learning?

35 Pages Posted: 30 Sep 2000 Last revised: 8 Sep 2021

See all articles by Michelle Lowry

Michelle Lowry

Drexel University; European Corporate Governance Institute (ECGI)

G. William Schwert

University of Rochester - Simon Business School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: October 2000

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.

Suggested Citation

Lowry, Michelle B. and Schwert, G. William, IPO Market Cycles: Bubbles or Sequential Learning? (October 2000). Available at SSRN: https://ssrn.com/abstract=244033

Michelle B. Lowry (Contact Author)

Drexel University ( email )

Philadelphia, PA 19104
United States
215-895-6070 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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Belgium

G. William Schwert

University of Rochester - Simon Business School ( email )

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585-461-5475 (Fax)

HOME PAGE: http://schwert.ssb.rochester.edu

National Bureau of Economic Research (NBER)

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