The Waiting Period of Initial Public Offerings

European Journal of Finance, Forthcoming

61 Pages Posted: 3 Jul 2016 Last revised: 15 Mar 2017

See all articles by Hugh M. J. Colaco

Hugh M. J. Colaco

Aston Business School

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group

Shantaram P. Hegde

University of Connecticut - School of Business

Date Written: February 21, 2017

Abstract

The length of time it takes an IPO firm to go public (called “waiting period”) reflects multiple layers of scrutiny from underwriters, auditors, venture capitalists, institutional investors, and regulators. Accordingly, we show that the waiting period is a good barometer of ex ante uncertainty about future cash flows and that it has predictive power after the firm goes public. We find that firms marked by short waiting periods experience lower underpricing and less uncertainty and superior stock/operating performance in the aftermarket. We also report that smaller firms are taking longer to go public after Sarbanes-Oxley, thus providing justification for the 2012 JOBS Act.

Keywords: initial public offering; waiting period; underpricing; ex ante uncertainty; stock performance; operating performance

JEL Classification: G30; G32

Suggested Citation

Colaco, Hugh M. J. and De Cesari, Amedeo and Hegde, Shantaram P., The Waiting Period of Initial Public Offerings (February 21, 2017). European Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2803076 or http://dx.doi.org/10.2139/ssrn.2803076

Hugh M. J. Colaco (Contact Author)

Aston Business School ( email )

Aston Triangle
Birmingham, B4 7ET
United Kingdom
+44 (0)121 204 3193 (Phone)

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group ( email )

Crawford House
Booth Street East
Manchester, M15 6PB
United Kingdom
+44 (0) 161 2754298 (Phone)

Shantaram P. Hegde

University of Connecticut - School of Business ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-5135 (Phone)

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