Survey of research on Initial Public Offerings

Abstract

The article provides a survey on popular IPO research topics and brief overview of often cited research papers in this field primarily from the “Journal of Finance”. Broadly known and hot debatable IPO anomalies are covered, various authors’ views and hypotheses with regard thereto within three approaches in discussing IPO are presented: from current owners’ viewpoint and new investors; from company’s viewpoint as an economic entity; and from the viewpoint of an underwriter and financial markets infrastructure. Particularly, the short-run underpricing, long-term underperformance of IPO stocks, hot issue markets, timing of IPOs and IPO waves, genuine reasons for going public and company efficiency thereafter, costs and drawbacks of IPO, signaling hypotheses, underwriter reputation, role of analyst coverage and various methods of offering and issue structures are discussed. The broad overview presented in the article allows for a comprehensive understanding of the body of research as of today and suggests potential areas for research, among the top of which are signaling role of issue methods, ownership structure and IPO waves in the emerging markets.