The New Issues Puzzle

  title={The New Issues Puzzle},
  author={T. Loughran and J. Ritter},
  journal={Journal of Finance},
Companies issuing stock during 1970 to 1990, whether an initial public offering or a seasoned equity offering, have been poor long-run investments for investors. During the five years after the issue, investors have received average returns of only 5 percent per year for companies going public and only 7 percent per year for companies conducting a seasoned equity offer. Book-to-market effects account for only a modest portion of the low returns. An investor would have had to invest 44 percent… Expand
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