The waiting period of initial public offerings |
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Authors: | Hugh MJ Colaco Amedeo De Cesari Shantaram P Hegde |
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Institution: | 1. Aston Business School, Birmingham, UK;2. Alliance Manchester Business School, Manchester, UK;3. School of Business, University of Connecticut, Storrs, CT, USA |
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Abstract: | The length of time it takes an IPO firm to go public (called ‘waiting period’) reflects multiple layers of scrutiny from underwriters, auditors, venture capitalists, institutional investors, and regulators. Accordingly, we show that the waiting period is a good barometer of ex ante uncertainty about future cash flows and that it has predictive power after the firm goes public. We find that firms marked by short waiting periods experience lower underpricing and less uncertainty and superior stock/operating performance in the aftermarket. We also report that smaller firms are taking longer to go public after SOX Act, thus providing justification for the 2012 JOBS Act. |
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Keywords: | Initial public offering waiting period underpricing ex ante uncertainty stock performance operating performance |
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