On the Long-Run Performance of IPOs: The Effect of Pre-IPO Management Decisions

41 Pages Posted: 9 Nov 2001

See all articles by Arif Khurshed

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Ram Mudambi

Temple University - Department of Strategic Management

Date Written: July 1999

Abstract

We propose that the long-run performance of IPOs is a function of pre-IPO factors, including managerial decisions and the firm's performance prior to going public. We relate long-run performance to a much richer set of explanatory factors than in the previous literature. Using a number of variables, we provide empirical evidence in support of this proposition. The manner in which a company is run before it is listed on the stock exchange gives a strong signal of how its shares will perform in its first few years of coming to the market. Using a UK data set, we find that the percentage of equity issued and the degree of multinationality are key predictors of IPO performance. A revised version of this paper is forthcoming in Managerial Finance, Vol. 33, No. 6, pp. 401-419, 2007.

Keywords: IPOs, long-run performance, signals

JEL Classification: G14, G32, G24

Suggested Citation

Khurshed, Arif and Goergen, Marc and Mudambi, Ram, On the Long-Run Performance of IPOs: The Effect of Pre-IPO Management Decisions (July 1999). Available at SSRN: https://ssrn.com/abstract=289697 or http://dx.doi.org/10.2139/ssrn.289697

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance ( email )

Crawford House
Oxford Road
Manchester, M15 6PB
United Kingdom
+44 0 161 275 4475 (Phone)
+44 0 161 275 4023 (Fax)

Marc Goergen

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Ram Mudambi (Contact Author)

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-2099 (Phone)
215-204-8029 (Fax)

HOME PAGE: http://sbm.temple.edu/~rmudambi/index.html

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