Long-Run Price and Operating Performance of Initial Public Offerings in Borsa Istanbul

Özet

This study investigates long-run price and operating performance of initialpublic offerings (IPOs) in Borsa Istanbul. The sample period of the analysis is between2010 and 2019. Various findings are obtained by employing several analytical methods.First, long-run price performance of IPOs is negative. Evidence shows that large issuesare likely to have relatively higher long-run returns than smaller issues. On the otherhand, if an issue is made in a hot-issue period, it is likely to have relatively more severeunderperformance in the long-term. Second, long-run operating performance is alsonegative. Third, the relationship between long-run abnormal price performance andoperating performance is significantly negative when asset efficiency or return on equityare used as a measure of operating performance. The higher the issuing company’sasset efficiency or equity efficiency is, more likely it is to have a severe abnormal priceunderperformance in their post-IPO years. This finding is weaker for return on equity,the explanatory power of return on equity may be seized by capital increase ratio insome model specifications. These results together support “windows of opportunity”theory of price and operating performance of IPOs.