The Waiting Period of Initial Public Offerings
European Journal of Finance, Forthcoming
61 Pages Posted: 3 Jul 2016 Last revised: 15 Mar 2017
Date Written: February 21, 2017
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: Suggested Citation