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    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 37, 2016 DOI: 10.1016/j.jcorpfin.2016.01.004

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Leaders and followers in hot IPO markets

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>04/2016
<mark>Journal</mark>Journal of Corporate Finance
Volume37
Number of pages26
Pages (from-to)309-334
Publication statusPublished
Early online date19/01/16
Original languageEnglish

Abstract

We model the dynamics of going public within an IPO wave. The model predicts that firms with better growth opportunities can find it optimal to go public early and accept underpricing of their issues to signal quality. Data supports this prediction as, on average, early movers underprice their issues significantly more and we show that leaders (early movers with high underpricing) obtain much higher valuations when going public than other IPO firms. Furthermore, after going public, leaders invest significantly more, their sales grow faster, and their profitability remains higher compared to other IPO firms.

Bibliographic note

This is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 37, 2016 DOI: 10.1016/j.jcorpfin.2016.01.004