Does the Market Incorporate Previous IPO Withdrawals When Pricing Second-Time Ipos?

51 Pages Posted: 1 Sep 2006

See all articles by Qin Lian

Qin Lian

Portland State University

Multiple version iconThere are 2 versions of this paper

Date Written: November 2006

Abstract

We find that second-time IPOs (issuers that return to the IPO market successfully after withdrawing their first IPOs) sell at a significant discount relative to similar contemporaneous first-time IPOs (IPOs that succeed in their first attempts). This result indicates that the withdrawal event, which is public information, is incorporated into offer prices when withdrawn-IPO firms return for second IPO attempts. We also find that, 1) second-time IPOs experience similar magnitude of price revision and initial return as comparable first-time IPOs, 2) in the long run, second-time IPOs do not underperform contemporaneous first-time IPOs in either stock price or operating performance. These findings suggest that the discount is appropriate and that the market fully adjusts the offer price of second-time IPOs to reflect the negative information conveyed by their previous withdrawals.

Keywords: IPO Withdrawal, First-Time IPOs, Second-Time IPOs, Valuation Discount

JEL Classification: G14, G34, G39

Suggested Citation

Lian, Qin, Does the Market Incorporate Previous IPO Withdrawals When Pricing Second-Time Ipos? (November 2006). Available at SSRN: https://ssrn.com/abstract=927872 or http://dx.doi.org/10.2139/ssrn.927872

Qin Lian (Contact Author)

Portland State University ( email )

United States
5037253728 (Phone)

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

Paper statistics

Downloads
169
Abstract Views
1,253
Rank
183,832
PlumX Metrics