The Determinants of Issue Cycles for Initial Public Offerings

Owen Graduate School of Management Working Paper No. 2003-02

34 Pages Posted: 22 Nov 2003

See all articles by Craig M. Lewis

Craig M. Lewis

Vanderbilt University - Finance

Vladimir I. Ivanov

US Securities & Exchange Commission

Date Written: November 2003


This paper identifies the determinants of market-wide and industry-specific security issue cycles using an autoregressive conditional duration model. We examine the business conditions, investor sentiment, and time-varying asymmetric information hypotheses and show that issue activity in different industries is consistent with different explanations. We find that the business conditions and sentiment hypotheses explain issue activity by manufacturing firms; while issue activity by financial institutions is partly explained by the sentiment hypothesis. On the other hand, none of these explanations are capable of explaining issue activity in the business services industry. Surprisingly, when all of these industries are pooled to examine market-wide activity, we find that none of these hypotheses are significantly related to issue activity. One explanation is that market-wide aggregation washes out much of the industry-specific information because issue activity is not perfectly correlated across industries. Using this observation, we then consider whether technological innovations are important determinants of industry-specific issue activity. We test for industry contagion by examining the periods before and after the Netscape initial public offering. We find evidence of an increase in the correlation of issue activity in related industries, which is consistent with the technological innovations hypothesis.

Keywords: Issue Cycles, Initial Public Offerings, IPO,autoregressive conditional duration, ACD, contagion

JEL Classification: C22, G00, G32

Suggested Citation

Lewis, Craig M. and Ivanov, Vladimir, The Determinants of Issue Cycles for Initial Public Offerings (November 2003). Owen Graduate School of Management Working Paper No. 2003-02, Available at SSRN: or

Craig M. Lewis (Contact Author)

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

Vladimir Ivanov

US Securities & Exchange Commission ( email )

Washington, DC
United States
202-551-5307 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics