Pricing and Performance of Initial Public Offerings in the United States

In this timely volume on newly emerging financial markets and investment strategies, Arvin Ghosh explores the intriguing topic of initial public offerings (IPOs) of securities. Before the 2000-2001 market turndown, hardly a week went by when more than a few companies did not become public, either in the organized stock exchange or in the Over the Counter (OTC) market. In the technology-heavy Nasdaq market, IPOs were crucial for that market's new growth, as Internet stocks supplied key momentum to the market. In the so-called "New Economy" of the 1990s, it was the ubiquitous IPO that ushered in the world's information technology revolution.

Ghosh sets out to examine the pricing and financial performance of IPOs in the United States during the period of 1990-2001. He discusses the rise and fall of IPOs in the preceding decade and explores the IPO process from the start of the prospectus to the end of the "quiet period" and aftermarket stabilization. Ghosh analyzes the deceptive underpricing, or "flipping," of Internet IPOs, the long-run performance of IPOs both in the New York Stock Exchange and in the Nasdaq markets, and the role of underwriters as market makers. Finally, Ghosh discusses the accuracy of analysts' earnings forecasts.

This project summarizes the recent revival of the IPO market and its place in capital formation, as well as the latest developments in the realm of United States IPOs. This work brings forth the true nature and consequences of the recent IPO phenomenon. It is a fascinating financial read and must-have for anyone involved in finance.

"Pricing and Performance of Initial Public Offerings in the United States is a timely discussion of newly emerging financial markets and investment strategies [...] it is primarily a scholarly text and financial historiography, not a how-to investment guide, yet the lessons and conclusions it draws from past IPOs surely point the way to insight concerning their future." --The Wisconsin Bookwatch

Arvin Ghosh is a professor in the Department of Economics, Finance, and Global Business at William Paterson University in Wayne, New Jersey. He is author of Capital Structure and Firm Performance (Transaction).