The new issues puzzle revisited: The role of firm quality in explaining IPO returns

Magnus Blomkvist (1) , Timo Korkeamäki (2) , John Pettersson (2)

1 Audencia Business School
2 Hanken School of Economics

We study the risk and return characteristics of IPOs for to 60 months. After controlling for Asness et al.'s (2014) quality minus junk factor, IPOs outperform the benchmark portfolios. The previously-documented negative abnormal IPO returns may derive from inaccurate benchmarks. JEL Classification: G12; G32

Keywords: Firm Quality; IPOs; Long-Run Performance

Domains: Humanities and Social Sciences; Economics and Finance

Magnus Blomkvist, Timo Korkeamäki, John Pettersson. The new issues puzzle revisited: The role of firm quality in explaining IPO returns. Economics Letters, 2017, 159, pp.88-91. ⟨10.1016/j.econlet.2017.07.022⟩. ⟨hal-01578933⟩