Net New Equity Issues and IPO Initial Returns

Abstract

Net new equity issues, defined as the amount of new equity issued less the amount of seasoned equity retired, is significantly negatively related to the level of future IPO initial returns, both on average and at the firm level. The extreme fluctuations in net new equity issues play an important role in explaining the variation of IPO initial returns over time.

Keywords: Net new equity issues, IPO, IPO initial returns

JEL Classification: G20