Do IPOs in Cold Markets Provide Better Returns

Significant listing day returns for IPOs is a phenomenon that is observed when companies go public. Using a larger timeframe (1999-2014), we attempt to determine the long-run performance of underpriced IPOs issued in an emerging economy such as India during the hot and cold IPO markets for 36-months. The results indicate that IPOs perform significantly better when issued during cold markets. We find that the distribution of returns is the same across cold and hot markets at specific periods during the 36-month period of study.

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