Review of Corporate Finance > Vol 5 > Issue 3–4

The Long-Term Performance of Overpriced and Underpriced Initial Public Offerings

Jacqueline Rossovski, Trinity Business School, Trinity College Dublin, Ireland, rossovsj@tcd.ie , Brian Lucey, Trinity Business School, Trinity College Dublin, Ireland AND Distinguished Research Fellow, Institute of Business Research, University of Economics Ho Chi Minh City, Vietnam AND Institute for Industrial Economics, Jiangxi University of Economics and Finance, China AND Abu Dhabi University, UAE, blucey@tcd.ie , Pia Helbing, Adam Smith Business School, University of Glasgow, UK, pia.helbing@glasgow.ac.uk
 
Suggested Citation
Jacqueline Rossovski, Brian Lucey and Pia Helbing (2025), "The Long-Term Performance of Overpriced and Underpriced Initial Public Offerings", Review of Corporate Finance: Vol. 5: No. 3–4, pp 349-404. http://dx.doi.org/10.1561/114.00000077

Publication Date: 14 Jul 2025
© 2025 J. Rossovski, B. Lucey and P. Helbing
 
Subjects
Performance measurement,  Corporate finance,  Financial markets
 
Keywords
JEL Codes: G14, G24, G32
Initial Public Offering, Negative First-Day IPO Returns, Performance
 

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In this article:
Introduction 
IPO Long-Term Performance: The Case of Overpriced IPOs 
Methodology and Data 
Results 
Conclusion 
References 

Abstract

This study investigates the long-term performance of overpriced and underpriced IPOs using a comprehensive dataset of U.S. IPOs from 2000 to 2019. Our findings reveal that overpriced IPOs, accounting for 21.36% of our sample, significantly underperform against both market benchmarks and underpriced IPOs. Interestingly, these overpriced IPOs demonstrate lower alphas in multi-factor regression analyses, suggesting nuanced market dynamics. Furthermore, overpriced IPOs are more likely to delist faster than underpriced ones, indicating a higher risk profile. This research enriches the IPO literature by comparing the performance of overpriced and underpriced IPOs and their implications on long-term returns.

DOI:10.1561/114.00000077

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Review of Corporate Finance, Volume 5, Issue 3–4 Special Issue on Initial Public Offerings: Articles Overview
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