Short- and Long-Term Performance of Polish IPOs

Abstract

The paper documents short-and long-run performance of initial public offerings on the Warsaw Stock Exchange from 1998 to 2008. The study reveals positive initial market-adjusted returns of 13.95 percent and significant long-term underperformance with mean of -22.62 percent for the three-year buy-and-hold strategy. We introduce ordinary least squares regressions to find determinants of initial returns. Our findings document strong explanatory power of early aftermarket volatility, issuer's size, growth opportunities, and profitability before the offering. Moreover, those variables that can partly explain differences in initial returns can also help to shed light on the long-term underperformance issue. Our results are thus consistent with Miller's (1977) divergence of opinion hypothesis.

Determinants of IPO Underpricing on the Warsaw Stock Exchange

“…This observation contradicts the information asymmetry theory. These results are supported by Jewartowski and Lizinska (2012). The authors studied the short and long-term performance of IPOs in Poland between the years 2000-2008.…”

The Activity of Family Businesses and the Phenomenon of Underpricing of Their Shares in IPOs in Poland in the Years 2013–2015

“…Studies in many countries confirmed the phenomenon of the aboveaverage rate of return on the shares purchased in the offer and sold on the first day of IPO (Ritter and Welch, 2002;Loughran, Ritter and Rydqvist, 1994). This phenomenon was also confirmed for the Polish market (Jewartowski and Lizi ska, 2012;Sieradzki, 2013;Gemzik-Salwach and Perz, 2013). A large difference between the IPO and the sales price of shares means that the company could sell itself for more, acquiring more resources; in the English literature, the money that could potentially be acquired (during the sales of shares at IPO prices) is referred to as "money left on the table".…”

Is the success of an issuer an investor success? Evidence from Polish IPOs

“…On the Polish stock market, the long-term operating underperformance was noted by Dudycz (2013). The market underperformance of IPO firms that went public on the Polish stock market was documented by Jelic and Briston (2003), Jewartowski and Lizińska (2012), and Lizińska and Czapiewski (2014).…”