Optimistic Investors, IPOs Cycle and Real Investment

  title={Optimistic Investors, IPOs Cycle and Real Investment},
  author={Romain Bouis},
Abstract This paper studies the dynamics of the IPO (Initial Public Offering) market and its effect on real investment decisions in emerging industries. We first propose a model of IPOs cycle based on divergence of opinion among investors and short-sale constraints. Using a real option approach, we show that firms are more likely to go public when the ratio of overvaluation over profits is high, that is after stock market run-ups. Because initial returns increase with the demand from optimistic… CONTINUE READING

Similar Papers

Figures from this paper.


Publications citing this paper.


Publications referenced by this paper.

Why Don’t Issuers Get Upset about Leaving Money on the Table

Loughran, Tim, Jay R. Ritter
  • Review of Financial Studies
  • 2002

Revelation and Underpricing, European Economic Review

Huisman, Kuno J.M
  • Journal of Financial Economics
  • 2001

The Expiration of IPO Share Lockups

Field, C Laura, Gordon Hanka
  • Journal of Finance
  • 2001

The Underpricing of Venture and Nonventure Capital IPOs : an Empirical Investigation

Paul Gompers, Joshua Lerner
  • Journal of Financial Services Research
  • 2001

Why Do Firms Switch Underwriters ?

Joshua Lerner
  • Journal of Financial Economics
  • 2001