![]() ![]() ![]() Our findings are consistent with the literature related to the information asymmetry in IPO market. While the IPOs that are issued in the hot market still tend to underperform in the long run even if the firms do not engage in earnings management. Our results show that although both hot market and earnings management play a role in explaining IPO’s long-run performance in their own rights, earnings management no longer exhibits significant explanatory power when the IPOs are issued in the cold market. This study investigates the relative importance of these two explanations to the IPO’s long-run underperformance. Two of the major explanations of that phenomenon are: “Hot market” and earnings management. One of the IPO-related anomalies that have been well-discussed in the finance literature is the IPO’s long-running underperformance. ![]()
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