Stock Prices and IPO Waves

The number of initial public offerings (IPOs) have changed dramatically over time. This paper aims to answer several questions like: What are the underlying causes of the wild swings in IPO volume? How is IPO volume related to market prices? Were the stock prices in March 2000 too high?…

The paper develops a model of stock valuation and optimal IPO timing when investment opportunities are time-varying. The model predicts that IPO waves are preceded by high market returns, followed by low market returns, and accompanied by high stock prices. These as well as other predictions are supported empirically…

Author: Lubos Pastor, Pietro Veronesi

Source: National Bureau of Economic Research

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