Abstract
ABSTRACT 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 more money in the issuers than in nonissuers of the same size to have the same wealth five years after the offering date.
Keywords
IssuerInitial public offeringEquity (law)Public offeringBusinessStock (firearms)Monetary economicsPrivate investment in public equityFinanceEconomicsFinancial economicsFinancial systemPrivate equity fund
Related Publications
The New Issues Puzzle
Companies issuing stock during 1970 1990, whether an initial public offering (IPO) or a seasoned equity offering (SEO), have been poor long run investments for investors. During...
The Impact of Capital Structure Change on Firm Value: Some Estimates
This study develops a model based on current corporate finance theories which explains stock returns associated with the announcement of issuer exchange offers. The major indepe...
Capital Investments and Stock Returns
Abstract Firms that substantially increase capital investments subsequently achieve negative benchmark-adjusted returns. The negative abnormal capital investment/return relation...
The financial performance of reverse leveraged buyouts
We examine the accounting and market performance of reverse leveraged buyouts (i.e., firms making their first public offering after previously completing a leveraged buyout). On...
Fundamentals and Stock Returns in Japan
ABSTRACT This paper relates cross‐sectional differences in returns on Japanese stocks to the underlying behavior of four variables: earnings yield, size, book to market ratio, a...
Publication Info
- Year
- 1995
- Type
- article
- Volume
- 50
- Issue
- 1
- Pages
- 23-51
- Citations
- 3369
- Access
- Closed
External Links
Social Impact
Altmetric
PlumX Metrics
Social media, news, blog, policy document mentions
Citation Metrics
3369
OpenAlex
Cite This
Tim Loughran,
Jay R. Ritter
(1995).
The New Issues Puzzle.
The Journal of Finance
, 50
(1)
, 23-51.
https://doi.org/10.1111/j.1540-6261.1995.tb05166.x
Identifiers
- DOI
- 10.1111/j.1540-6261.1995.tb05166.x