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Strategic waiting in the IPO markets

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  • Çolak, Gönül
  • Günay, Hikmet
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    Abstract

    The paper analyzes the strategic waiting tendencies of IPO firms. Our game theoretic model shows why some high-quality firms may strategically delay their initial public offering until a favorable signal about the economic conditions is generated by other issuing firms. Survival analysis suggests that IPOs in the highest quality decile have significantly higher median waiting days (since the start of a rising IPO cycle) than the IPOs in the lowest decile. During the early stages of an expanding IPO cycle the average firm quality is lower than in its later stages. We find supporting evidence also from the IPOs of future S&P 500 firms.

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    File URL: http://www.sciencedirect.com/science/article/B6VFK-52BPK0B-1/2/d49b97589353456c2c435e87469ca019
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 17 (2011)
    Issue (Month): 3 (June)
    Pages: 555-583

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    Handle: RePEc:eee:corfin:v:17:y:2011:i:3:p:555-583

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    Web page: http://www.elsevier.com/locate/jcorpfin

    Related research

    Keywords: IPO clustering IPO cycles Social learning Information aggregation Strategic waiting Survival analysis;

    References

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    Cited by:
    1. Premti, Arjan & Madura, Jeff, 2013. "Motives and consequences of IPOs in cold periods," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 486-496.
    2. Gonul Colak, 2012. "IPO characteristics of index firms," Managerial Finance, Emerald Group Publishing, vol. 38(12), pages 1134-1159.
    3. Zhiqiang HU & Yizhu WANG, 2013. "The IPO Cycles in China's A-share IPO Market: Detection Based on a Three Regimes Markov Switching Model," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 115-131, October.

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