2000
DOI: 10.3386/w7935
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IPO Market Cycles: Bubbles or Sequential Learning?

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Cited by 186 publications
(311 citation statements)
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“…For instance, during 1999-2000, average first day IPO returns were an astonishing 65% compared to a more normal 15% for the rest of the 1990s. 1 Surprisingly, not only did such high underpricing fail to discourage new issues but, as documented by Lowry and Schwert (2002), issuance volume actually increased. If underpricing were related to uncertainty regarding issue quality as in most rational models of IPOs, and uncertainty is higher during hot markets, one would expect increased investment by banks in information generation to mitigate this problem.…”
Section: Introductionmentioning
confidence: 99%
“…For instance, during 1999-2000, average first day IPO returns were an astonishing 65% compared to a more normal 15% for the rest of the 1990s. 1 Surprisingly, not only did such high underpricing fail to discourage new issues but, as documented by Lowry and Schwert (2002), issuance volume actually increased. If underpricing were related to uncertainty regarding issue quality as in most rational models of IPOs, and uncertainty is higher during hot markets, one would expect increased investment by banks in information generation to mitigate this problem.…”
Section: Introductionmentioning
confidence: 99%
“…In contrast, in periods when there are few and less profitable investment opportunities, exiting investors retain a larger fraction of shares and underprice less. 5 The idea of waves of quick and costly disinvestment is in line with many empirical studies finding that during hot issue markets firms taken public are usually younger and less established (see Lowry and Schwert (2002) and Loughran and Ritter (2004) for US firms and Rydqvist and Hogholm (1995) and Giudici and Roosenboom (2004) for European firms).…”
Section: Introductionmentioning
confidence: 66%
“…Empirical studies confirm this idea of quick and costly exits. Not only hot issues are found to be correlated to growth opportunities (Choe, Masulis, and Nanda (1993) and Pástor and Veronesi (2005)), but also during hot issue periods the firms taken public are usually younger and less established (see Lowry and Schwert (2002) and Loughran and Ritter (2004) for US firms and Rydqvist and Hogholm (1995) and Giudici and Roosenboom (2004) for European firms). The degree of moral hazard depends on the productivity of entrepreneurial effort, which may reflect either the quality of the entrepreneur or of his idea.…”
Section: Ipo Of the Early Stage Investormentioning
confidence: 99%
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“…investors to reevaluate these firms' market values (Benveniste et al, 2002;Lowry and Schwert, 2002). Fourth, this study examines the relationship of risk-return in the land auction markets.…”
Section: Asian Economic and Financial Reviewmentioning
confidence: 99%