Long-term IPO Performance in the United States Stock Market during Covid-19 and its Defining Financial Factors
Yastrebkov, Maxim (2023)
2023
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2023120534469
https://urn.fi/URN:NBN:fi:amk-2023120534469
Tiivistelmä
The Initial Public Offering (IPO) is a critical milestone for companies, providing a significant opportunity to obtain essential capital for growth and market expansion. Despite the annual inflow of companies seeking investors through IPO procedure, the outbreak of the Covid-19 pandemic in early 2020 disrupted the stability of the IPO market, leading many firms to postpone their planned IPOs. However, the latter half of 2020 witnessed an unprecedented IPO boom, the most substantial in three decades.
This thesis delves into the examination of the long-term IPO performance of 150 companies that made their public debut in 2020 on the NYSE, NASDAQ, and NYSEAMERICAN U.S. stock exchanges. Employing the Buy-and-hold abnormal return methodology and comparing the findings with market indexes such as S&P 500, NASDAQ, and a sample of matched by size and industry companies, the researcher analyzes the post-IPO market dynamics, the researcher was able to conclude the significant existence of both short-term measured over 12 months and long-term measured over 36 months IPO underperformance.
For a more detailed search for the causes of this effect multiple linier regression (MLR) with financial influencing factors such as ROA and Total Sales 2 years before the company's IPO is integrated in this thesis, in which no significance was found. Despite the absence of statistically significant correlation, this study contributes to a deeper understanding of the complex relationship between financial metrics and post-IPO outcomes. The implications of these results are far-reaching, urging all stakeholders involved in the IPO process to carefully evaluate and adapt strategies in light of the complex and evolving dynamics observed in the market.
This thesis delves into the examination of the long-term IPO performance of 150 companies that made their public debut in 2020 on the NYSE, NASDAQ, and NYSEAMERICAN U.S. stock exchanges. Employing the Buy-and-hold abnormal return methodology and comparing the findings with market indexes such as S&P 500, NASDAQ, and a sample of matched by size and industry companies, the researcher analyzes the post-IPO market dynamics, the researcher was able to conclude the significant existence of both short-term measured over 12 months and long-term measured over 36 months IPO underperformance.
For a more detailed search for the causes of this effect multiple linier regression (MLR) with financial influencing factors such as ROA and Total Sales 2 years before the company's IPO is integrated in this thesis, in which no significance was found. Despite the absence of statistically significant correlation, this study contributes to a deeper understanding of the complex relationship between financial metrics and post-IPO outcomes. The implications of these results are far-reaching, urging all stakeholders involved in the IPO process to carefully evaluate and adapt strategies in light of the complex and evolving dynamics observed in the market.