Does an Industry Effect Exist for Initial Public Offerings?

Posted: 11 Aug 2003

See all articles by Aigbe Akhigbe

Aigbe Akhigbe

University of Akron - Department of Finance

Stephen F. Borde

University of Central Florida - College of Business Administration

Ann Marie Whyte

University of Central Florida

Abstract

We examine the impact of initial public offerings (IPOs) on rival firms and find that the valuation effects are insignificant. This insignificant reaction can be explained by offsetting information and competitive effects. Significant positive information effects are associated with IPOs in regulated industries and the first IPO in an industry following a period of dormancy. Significant negative competitive effects are associated with larger IPOs in competitive industries, those in relatively risky industries, those in high performing industries, and those in the technology sector. IPO firms that use the proceeds for debt repayment appear to represent a more significant competitive threat to rival firms relative to IPO firms that use their proceeds for other purposes.

Suggested Citation

Akhigbe, Aigbe and Borde, Stephen F. and Whyte, Ann Marie, Does an Industry Effect Exist for Initial Public Offerings?. Available at SSRN: https://ssrn.com/abstract=421001

Aigbe Akhigbe

University of Akron - Department of Finance ( email )

Akron, OH 44325-4803
United States
330-972-6883 (Phone)

Stephen F. Borde (Contact Author)

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States
407-823-2977 (Phone)
407-823-6676 (Fax)

Ann Marie Whyte

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

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