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The performance and the survivorship of New Zealand IPOs

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  • Chi, Jing
  • McWha, Matthew
  • Young, Martin

Abstract

This paper studies the performance and the survivorship of New Zealand IPOs for the period 1991 to 2005. We find that the commonly reported features of IPOs, such as underpricing and underperformance, exist in New Zealand, with the level of underpricing declining in recent years. We find that the operating performance of companies in our sample does not change significantly after listing. Underpricing, size and operating performance are found to influence IPO market performance, while higher risk and new start-up companies have lower operating performance after listing. In relation to survivorship, the majority of delisted firms are merger and acquisition targets rather than failed firms. Interestingly, acquired firms have better market performance and have been operating longer than the surviving firms, while failed firms tend to have higher market volatility, change their management more often, and be issued in the hot market periods.

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Bibliographic Info

Article provided by Elsevier in its journal International Review of Financial Analysis.

Volume (Year): 19 (2010)
Issue (Month): 3 (June)
Pages: 172-180

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Handle: RePEc:eee:finana:v:19:y:2010:i:3:p:172-180

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Web page: http://www.elsevier.com/locate/inca/620166

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Keywords: New Zealand IPOs Performance Survivorship;

References

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  1. Ibbotson, Roger G., 1975. "Price performance of common stock new issues," Journal of Financial Economics, Elsevier, Elsevier, vol. 2(3), pages 235-272, September.
  2. Rock, Kevin, 1986. "Why new issues are underpriced," Journal of Financial Economics, Elsevier, Elsevier, vol. 15(1-2), pages 187-212.
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  7. Jing Chi & Carol Padgett, 2006. "Operating Performance and Its Relationship to Market Performance of Chinese Initial Public Offerings," Chinese Economy, M.E. Sharpe, Inc., vol. 39(5), pages 28-50, October.
  8. Wolfgang Drobetz & Matthias Kammermann & Urs Wälchli, 2005. "Long-Run Performance of Initial Public Offerings: The Evidence for Switzerland," Schmalenbach Business Review (sbr), LMU Munich School of Management, LMU Munich School of Management, vol. 57(3), pages 253–275, July.
  9. Gao, Yan, 2010. "What comprises IPO initial returns: Evidence from the Chinese market," Pacific-Basin Finance Journal, Elsevier, Elsevier, vol. 18(1), pages 77-89, January.
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  12. Tim Loughran & Jay R. Ritter, 2002. "Why Don't Issuers Get Upset About Leaving Money on the Table in IPOs?," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 15(2), pages 413-444, March.
  13. Douglas A. Hensler & Ronald C. Rutherford & Thomas M. Springer, 1997. "The Survival Of Initial Public Offerings In The Aftermarket," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(1), pages 93-110, 03.
  14. William L. Megginson & Robert C. Nash & Jeffry Netter & Adam L. Schwartz, 2000. "The Long-Run Return to Investors in Share Issue Privatizations," Financial Management, Financial Management Association, Financial Management Association, vol. 29(1), Spring.
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Cited by:
  1. Liu, Jia & Lister, Roger & Pang, Dong, 2013. "Corporate evolution following initial public offerings in China: A life-course approach," International Review of Financial Analysis, Elsevier, Elsevier, vol. 27(C), pages 1-20.

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