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Pre-IPO financial performance and aftermarket survival

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  • Gijoon Hong
  • Stavros Peristiani

Abstract

Many commentators have portrayed the tech boom of the late 1990s as an era of unprecedented deterioration in the quality of firms undertaking initial public offerings. But as far back as the early 1980s, firms seeking to go public were displaying signs of financial weakness, and the failure rate of issuers was on the rise. An analysis of the likelihood of failure among IPO firms in 1980-2000 suggests that pre-issue profitability is a good predictor of aftermarket survival.

Suggested Citation

  • Gijoon Hong & Stavros Peristiani, 2004. "Pre-IPO financial performance and aftermarket survival," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 10(Feb).
    • Handle: RePEc:fip:fednci:y:2004:i:feb:n:v.10no.2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Roberto Pinheiro, 2018. "Venture capital and underpricing: capacity constraints and early sales," Annals of Finance, Springer, vol. 14(1), pages 1-47, February.
    2. Ercan Ozen, 2016. "Behaviors Of Companies After Initial Public Offering The Case Of Turkey," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 4(4), pages 20-28.
    3. Ellis Scharfenaker & Gregor Semieniuk, 2017. "A Statistical Equilibrium Approach to the Distribution of Profit Rates," Metroeconomica, Wiley Blackwell, vol. 68(3), pages 465-499, July.
    4. Cirillo, Alessandro & Mussolino, Donata & Romano, Mauro & Viganò, Riccardo, 2017. "A complicated relationship: Family involvement in the top management team and post-IPO survival," Journal of Family Business Strategy, Elsevier, vol. 8(1), pages 42-56.
    5. Cao, Melanie & Shi, Shouyong, 2006. "Signaling in the Internet craze of initial public offerings," Journal of Corporate Finance, Elsevier, vol. 12(4), pages 818-833, September.
    6. Tomáš Buus, 2008. "Performance of Quoted and Non-quoted Companies in the Europe," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2008(4), pages 45-69.
    7. Williams, David R., 2013. "Human and financial capital as determinants of biopharmaceutical IPO de-listings," Journal of Business Research, Elsevier, vol. 66(12), pages 2612-2618.
    8. Diego Useche & Sophie Pommet, 0. "Where do we go? VC firm heterogeneity and the exit routes of newly listed high-tech firms," Small Business Economics, Springer, vol. 0, pages 1-21.
    9. Garima Baluja & Balwinder Singh, 2016. "Lead Manager’s Reputation and Aftermarket Survival of Initial Public Offerings: Empirical Evidence from India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 41(4), pages 384-404, November.
    10. Ioannis Asimakopoulos & Dionysis Lalountas & Costas Siriopoulos, 2008. "The determinants for the survival of firms in the Athens Exchange," Economic Bulletin, Bank of Greece, issue 31, pages 07-30, November.
    11. Diego Useche & Sophie Pommet, 2021. "Where do we go? VC firm heterogeneity and the exit routes of newly listed high-tech firms," Small Business Economics, Springer, vol. 57(3), pages 1339-1359, October.
    12. Constant Djama & Isabelle Martinez & Stéphanie Serve, 2012. "What do we know about delistings? A survey of the literature," THEMA Working Papers 2012-38, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    13. Cécile Carpentier & Jean-Marc Suret, 2009. "The Survival and Success of Canadian Penny Stock IPOs," CIRANO Working Papers 2007s-28, CIRANO.
    14. Radosław Pastusiak & Monika Bolek & Maciej Malaczewski & Marta Kacprzyk, 2016. "Company Profitability Before and After IPO. Is it a Windows Dressing or Equity Dilution Effect?," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(1), pages 112-124.

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