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This study provides evidence that Chinese initial public offerings (IPOs) report better operating performance than industry peers in the pre-IPO period, and worse performance in post-IPO period compared to the pre-IPO level. We find that related party transactions (RPTs) with controlling shareholders have significant effects on the long-run performance of IPO firms. Controlling shareholders structure a large percentage of operating (non-loan) RPTs to artificially boost revenues and/or profits of their IPO subsidiaries in the pre-IPO period. However, in the post-IPO period, controlling shareholders discontinue this RPT-based earnings manipulation practice and begin to expropriate IPO subsidiaries by obtaining a large percentage of cash loans, primarily in return for profits and/or resources transferred into the IPO subsidiaries in the pre-IPO period. Finally, we find that state-controlled IPO firms with a highly concentrated ownership structure and a less independent board of directors are more likely to be expropriated by controlling shareholders in the post-IPO period through related loans.

The purpose of this paper is to analyze the long-term performance of construction sector initial public offers (IPO) made in India during 2006–2015. The study aims to compare the performance of the construction sector IPOs with the non-construction sector IPOs and finds the determinants of long-term performance of construction sector IPO with a time horizon of three years. The study also attempts to find out, if the long-term IPO underpricing that has been discussed in the literature, really exists or it is a myth.

The study uses data of IPOs listed on National stock exchange during 2006–2015. In total, 281 IPOs are considered for the study, among which 44 are construction sector IPOs. IPOs anniversary performance of three successive years is calculated from the date of listing, and a random effect panel regression model with clustered robust estimates using the maximum likelihood method is performed to find out the determinants of IPO performance. The data are also tested for multicollinearity, stationarity and heteroscedasticity to ensure the robustness of results.

The results show that in the long-run construction sector IPOs outperform the non-construction sector IPOs, though the performance is below average when compared to market returns. The IPO underpricing is a myth, and IPO underperformance is a reality in India. The performance of construction sector IPOs is driven positively by market return, size of the firm and negatively by liquidity of the firm.

The paper is the first attempt to analyze the performance of construction sector IPOs, and compare it with non-construction sector IPOs. The study uses a random effect panel regression model with robust estimates using the maximum likelihood method to ensure the robustness of results. This is the first time the performance of IPOs is studied with a panel data approach.

This paper seeks to answer the question whether control and changes in control after a firm's initial public offering (IPO) have a significant influence on firm value in two very different systems of corporate governance, i.e. Germany and the UK.

The dynamics of post‐IPO firm performance are investigated for size‐ and industry‐matched German and UK samples.

It was found that, although the post‐IPO evolution of control in German and UK companies differs significantly, there is no significant change in their long‐run financial and operating performance. The paper concludes that the long‐run performance of IPOs is not correlated with control and ownership retention. Moreover, the results presented in the paper suggest that the poor long‐term performance of IPOs documented in empirical literature can neither be explained by potential agency conflicts arising from the reduction in control held by the original shareholders nor by a reduction in the incumbents’ control.

Contrary to what may be expected, the involvement of the pre‐IPO shareholders in the firm after the flotation is not crucial to the firm in terms of value generation. Although a reduction in control is expected to lead to less intensive monitoring as strong blockholders are no longer present, there is still no evidence that the firm will suffer in terms of its performance over the long run.

The paper uses an original methodology which consists of matched samples of German and UK firms with similar initial levels of control. The paper then tracks changes in control over the six years after the IPO and links these to the levels of and changes in performance.

Increasingly, marketing managers are asked to consider the financial implications, in terms of both book and market values, when making strategic decisions. The purpose of this paper is to investigate the role of marketing expenditures in explaining the variation in the aftermarket performance of a sample of firms conducting initial public offerings (IPOs).

Theories from marketing and finance – market-based assets (MBA) theory and signaling theory respectively – serve as the conceptual basis of this paper. The results of this study, based on a sample of 2,103 IPOs covering the 1996 to 2008 time period, suggest that increased marketing spending positively impacts aftermarket (i.e. stock price) performance.

The authors find that while short-run aftermarket performance is positively and significantly impacted by pre-IPO marketing spending, long-run firm performance measures do not appear to be impacted by pre-IPO marketing spending. Further, pre-IPO marketing spending does not incrementally reduce underpricing or improve long-run performance when the IPO takes place during extreme market conditions such as recessions or hot markets, and these results are important to the shareholders and potential investors in the firm.

Theoretically this paper advances the literature on the marketing-finance interface by extending the MBA and signaling theories. For practice, the results indicate that spending more money on marketing before the IPO and disclosing this information produces positive bottom-line results for the firm.

While Luo (2008) documents a significant relationship between the firms’ pre-IPO marketing spending and IPO underpricing, few studies explore the impact of marketing spending on stock price performance beyond the first day of trading. This paper makes three unique contributions. First, the authors extend Luo’s study by investigating the effect of marketing expenditures on underpricing during extreme market conditions. Second, the authors are the first to examine IPO performance in the long-run as well as the short-run. Finally, the authors assess how long-run performance is impacted by marketing spending during extreme market conditions. The findings of this study has implications for managers and shareholders of firms considering going public through a traditional IPO.

The main objective of this paper is to measure Saudi Arabian initial public offerings' (IPOs) financial performance before and after going public on the Saudi Stock Exchange Market. The paper also aims to explore factors associated with the financial performance variation between pre‐ and post‐IPO.

A sample of 16 Saudi IPOs is investigated. A matched pairs methodology is mainly used combined with regression analysis.

Saudi IPOs exhibit a significant decline in the post‐IPO performance compared to the pre‐IPO level as measured by the return on assets and return on sales. It was also found that the performance deterioration is associated with the IPO event.

The paper is the first assessment of IPOs clustering occurred in Saudi Arabia.

This study aims to improve the understanding of the relationship between organizational slack and firm performance for high technology initial public offerings (IPOs).

Using cluster analysis the paper investigates configurations of slack and their associated performance implications.

The findings indicate the existence of distinct configurations of slack resources and associated performance differences among the configurations. Implications of the findings for managerial practice and future research are discussed.

The purpose of this study is to extend slack measurement research by examining the slack and performance relationship in high‐technology IPOs from a configurational perspective.

The purpose of this paper is to link valuation of different accounting items to research and development (R&D) investment decisions and investigate how suboptimal R&D choices during initial public offering (IPO) are linked to future operating and market underperformance.

For firms with substantial growth opportunities, accounting net income is a poor measure of the firm’s performance (Smith and Watts, 1992). Therefore, other metrics such as R&D intensity are used by investors to evaluate firms’ performance. This leads to a coexistence of two strategies: if earnings are the main value driver, firms tend to underinvest in R&D; and if R&D expenditures are the main value driver, firms tend to overinvest in R&D.

The authors show that the R&D investment decision varies systematically with cross-sectional characteristics: firms that are at the growth stage, unprofitable or belong to science-driven industries are more likely to overinvest, while firms that are able to avoid losses by decreasing R&D expenditure are more likely to underinvest. Finally, they find that R&D overinvestment leads to future underperformance as evidenced by poor operating return on assets, lower product market share, higher frequency of delisting due to poor performance and negative abnormal stock returns.

While prior literature concentrates on R&D underinvestment as a tool of reporting higher net income, the authors demonstrate the existence of an alternative strategy used by many IPO firms – R&D overinvestment.

This chapter investigates the impact of venture capitalists on the operating and market performance of firms going public on the French Nouveau Marché, the German Neuer Markt and the British techMARK. Considering different variables that reflect the quality of venture-backing, the findings suggest that venture-backed firms do not generally outperform those without venture-backing. However, a subgroup of internationally operating venture capitalists has positive effects on the performance of portfolio firms. The outcome is interpreted as evidence of heterogeneity among venture capitalists in the European market.

The aim of the paper is to study the long‐run under‐performance of UK initial public offerings (IPOs) by relating it to the pre‐IPO financial performance of the firm as well as the managerial decisions taken before the IPO.

The three‐year share returns of UK IPOs is studied using various methodologies such as buy and hold returns, cumulative abnormal returns and Fama and French three‐factor returns.

It was found that the percentage of equity issued and the degree of multinationality of a firm are the key predictors of its performance after the IPO. It is also found that small firms behave differently from large firms and suffer from worse long‐run performance than large firms.

There is a great need for future research to focus on ownership structure and long‐run returns. Further, a focus on the level of debt and venture capital financing in the pre‐IPO period may also uncover important relationships with the long‐run performance of a firm.

The results obtained from this study provide important information for the prospective long term investors in new issues. While pre‐IPO performance of a firm cannot predict the post‐IPO performance with certainty, nevertheless the results of this study suggest that long‐term investors should show caution while deciding on long term investment in IPO firms.

The paper explains the post‐IPO underperformance of firms by relating it to the pre‐IPO managerial decisions made in the firm. It also documents the role of multinationality in explaining long run underperformance.

The purpose of this paper is to consider the operating performance of real estate investment trust initial public offerings (REIT IPOs) as a measure to find additional evidence of market timing in this sector.

A sample of REIT IPOs is analyzed to determine the relationship between IPO clustering and several measures of REIT operating performance.

The results suggest that timing the market by marginal firms in the REIT sector would be difficult, due to the transparent nature of REITs, leading to lower level of informational asymmetry between REIT managers and investors. Consistent with results found for non‐REIT firms in industry clusters, no evidence was found of a significant difference between the operating performance of REITs which are part of an IPO cluster and those that went public outside of the identified cluster periods.

This study shows that REIT market is efficient and would not allow REIT managers to time the market.

Using stringent measures of identifying REIT IPO clusters and operating performance as a measure to gauge market timing, this study differs from previous studies and provides additional and robust evidence of transparent nature of REITs that leads to reduced information asymmetry between managers and investors. This result supports the theory that REITs are more transparent and thus less likely to be over‐invested during IPO cluster periods.