Handbook of Research on IPOs
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Handbook of Research on IPOs

Edited by Mario Levis and Silvio Vismara

The Handbook of Research on IPOs provides a comprehensive review of the emerging trends and directions in the global initial public offerings (IPO) markets. The empirical evidence included in the book covers Europe, the US and the Far East, and presents a truly global perspective of IPO markets around the world and at the different stages of the entire IPO process.
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Chapter 17: Acquisitions, SEOs, divestitures and IPO performance

Naaguesh Appadu, Anna Faelten and Mario Levis


Since the early 1990s, when Ritter (1991) first documented the aftermarket under performance of initial public offerings (IPOs), a considerable amount of empirical research across many countries has corroborated his findings and highlighted some significant differences in performance across different types of IPOs. Post-event market underperformance, however, is not a unique feature of IPOs. A number of studies, for example, report that firms with seasoned equity offerings (SEOs) underperform in comparison to similar non-issuing firms in the three-year period following the issue (Loughran and Ritter, 1995; Spiess and Affleck-Graves, 1995; Iqbal et al., 2006). Furthermore, despite the positive initial returns for firms announcing acquisitions, there is considerable evidence suggesting negative post-event performance at least for stock-financed acquisitions (Loughran and Vijh, 1997; Rau and Vermaelen, 1998; Wiggenhorn et al., 2007).

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