The Impact of Fundamentals on IPO Valuation

  title={The Impact of Fundamentals on IPO Valuation},
  author={Rajesh Aggarwal and Sanjai Bhagat and Srinivasan Rangan},
  journal={Capital Markets: Asset Pricing \& Valuation eJournal},
We investigate IPO valuation for a sample of 1,655 IPOs from three time-periods: 1986-1990, January 1997 through March 2000 (designated as the boom period), and April 2000 through December 2001 (designated as the crash period). We find that firms with more negative earnings have higher valuations than do firms with less negative earnings and firms with more positive earnings have higher valuations than firms with less positive earnings. This V-shaped pattern to the relation between value and… 
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