Leverage, liquidity and long-run IPO returns

@inproceedings{Eckbo2000LeverageLA,
  title={Leverage, liquidity and long-run IPO returns},
  author={B. Eckbo and Oyvind Norli},
  year={2000}
}
It is well known that IPO stocks on average substantially underperform (over 3-5 years) non-IPO stocks matched on firm size. With a large sample of Nasdaq IPOs, this paper presents systematic evidence that IPO stocks are less risky than the size-matched firms and thus have lower expected return. We show that, in the years immediately following the issue, IPO stocks have lower leverage ratios and higher liquidity (turnover) than matched firms. A model with macroeconomic risk factors further… Expand
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