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SB IPOs and IPO Anomalies: An Empirical Analysis of the Small Firm Uniqueness Hypothesis

Author

Listed:
  • James C. Brau

    (Brigham Young University)

  • C. Troy Carpenter

    (Brigham Young University)

Abstract

The purpose of this paper is to provide a direct test of the small-firm uniqueness hypothesis advanced by Ang (1991). We do this by using the 5B-IPO program of the SEC as our instrument to define a small firm. Having identified small firms, we test the three IPO anomalies to see if small firms differ from large firms along these dimensions. We find that 5B IPOs experience the three anomalies; however, they do so in disparate ways than mainline IPOs do. In sum, we provide support for the small firm uniqueness hypothesis.

Suggested Citation

  • James C. Brau & C. Troy Carpenter, 2013. "SB IPOs and IPO Anomalies: An Empirical Analysis of the Small Firm Uniqueness Hypothesis," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 16(2), pages 75-96, Spring.
  • Handle: RePEc:pep:journl:v:16:y:2013:i:2:p:75-96
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    References listed on IDEAS

    as
    1. Ritter, Jay R, 1984. "The "Hot Issue" Market of 1980," The Journal of Business, University of Chicago Press, vol. 57(2), pages 215-240, April.
    2. James C. Brau & Gardner Gee, 2010. "Micro-IPOs: An Analysis of the Small Corporate Offering Registration (SCOR) Procedure with National Data," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 14(3), pages 69-89, Fall.
    3. Ritter, Jay R, 1991. " The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(1), pages 3-27, March.
    4. James S. Ang, 1991. "Small Business Uniqueness and the Theory of Financial Management," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(1), pages 1-13, Spring.
    5. Hsuan-Chi Chen & Jay R. Ritter, 2000. "The Seven Percent Solution," Journal of Finance, American Finance Association, vol. 55(3), pages 1105-1131, June.
    6. Bradley, Daniel J. & Jordan, Bradford D., 2002. "Partial Adjustment to Public Information and IPO Underpricing," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 37(04), pages 595-616, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    IPO; Initial Public Offering; Anomalies; Small Firm Uniqueness; SB-2;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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