The relationship between IPO returns and factors influencing IPO performance: Case of Istanbul Stock Exchange


Managerial Finance, vol.28, no.2, pp.18-38, 2002 (ESCI) identifier

  • Publication Type: Article / Article
  • Volume: 28 Issue: 2
  • Publication Date: 2002
  • Doi Number: 10.1108/03074350210767672
  • Journal Name: Managerial Finance
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, ABI/INFORM, EconLit, Index Islamicus
  • Page Numbers: pp.18-38
  • Keywords: Accounting research, Flotation, Pricing, Return on investment, Theory, Turkey
  • Dokuz Eylül University Affiliated: Yes


The pricing and performance of IPOs is one of those issues that never are laid to rest in the finance literature. As a result of the long-standing debate on the reasons of abnormal initial returns from IPOs and long-term under-performance of IPOs, various hypotheses have been formulated by finance researchers. The empirical finance literature contains both supporting and conflicting evidence for these hypotheses. Consequently, the present study aimed to investigate the IPO returns by the data generated by an emerging market, namely ISE, for the period from 1990 to 1997, in two stages. In the first stage, the relationship between the returns is analyzed by comparing mean returns and by univariate regression analysis. In the second stage, the determinants of returns are examined by cross sectional analysis and multivariate regression analysis. The findings of the present study provide evidence to the fads hypothesis and the Winner’s Curse hypothesis. Moreover, the factors that decrease the uncertainty associated with the IPOs are found to lead to lower returns. It must also be emphasized that the findings of the study does not provide evidence of long-term underperformance. © MCB UP Limited 2002.