The aftermarket performance of small firm initial public offerings

摘要: Abstract The dream of many entrepreneurs is to some day take his or her growing small firm public and, thereby become the CEO a publicly-traded corporation. Currently, are continuing utilize initial offerings (IPOs), as viable source venture financing. IPOs also represent mechanism for harvesting capital and entrepreneurial investments. touted benefits taking company include abilities borrow additional funds; return equity market; negotiate mergers without depleting cash; potential enhanced personal wealth so forth. Investors in issues often motivated by discovering another Apple Computer, perhaps an IBM at “ground floor.” This study empirically examines aftermarket returns publicly-held firms that have issued offerings. Aftermarket refers stock immediately after begins trading. specifically two questions. First, “Is there positive risk-return relationship returns, where higher risk will generate return?” Second, “Will show on industry effect, certain industries automatically returns?” Answers these questions affect strategic financial alternatives available both before going decisions investors interested financing corporations. research findings indicate planning younger probably not them numerous subsequent alternatives, utilizing corporate stock, if true performance their taken into consideration. Likewise, may be disappointed firms. A relationship, age was proxy measure risk, did exist. even though initially quoted same been substantial. On other hand, older typically favorable. Finally, suggests neither nor should bet solely particular categorization “carry” performance. While indicated significant based classification were generally statistically significant. therefore always exercise firmspecific due diligence investing issues, since variance market tends large.