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IPO market timing. The evidence of the disposition effect among corporate managers

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  • Plotnicki, Michal
  • Szyszka, Adam

Abstract

Until now, IPO market timing has been mostly associated with a varying number of IPOs in certain periods of “hot” and “cold” issue markets. We would like to offer a different perspective. We focus on a speed of the IPO process, after the decision to go public was actually made. Our hypothesis is that in “hot market” managers will tend to minimize the time necessary to go public in order to take advantage of high valuations as quickly as possible. On the contrary, if the firm is not ready with the IPO on time and in the meantime the market falls during the going-public process, managers will tend to delay the IPO hoping that the good market conditions will come back soon. We argue that such a behavior might be attributed to the disposition effect among firms' managers.

Suggested Citation

  • Plotnicki, Michal & Szyszka, Adam, 2014. "IPO market timing. The evidence of the disposition effect among corporate managers," Global Finance Journal, Elsevier, vol. 25(1), pages 48-55.
    • Handle: RePEc:eee:glofin:v:25:y:2014:i:1:p:48-55
    DOI: 10.1016/j.gfj.2014.03.005
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    Cited by:

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    3. Rzeszutek, Marcin & Godin, Antoine & Szyszka, Adam & Augier, Stanislas, 2020. "Managerial overconfidence in initial public offering decisions and its impact on macrodynamics and financial stability: Analysis using an agent-based model," Journal of Economic Dynamics and Control, Elsevier, vol. 118(C).
    4. Hussain, Hafezali Iqbal & Ali, Mohsin & Hassan, M. Kabir & El-Khatib, Rwan, 2023. "Asymmetric capital structure speed of adjustment, equity mispricing and Shari’ah compliance of Malaysian firms," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 965-975.
    5. Hincapié-Salazar, Juliana & Agudelo, Diego A., 2020. "Is the disposition effect in bonds as strong as in stocks? Evidence from an emerging market," Global Finance Journal, Elsevier, vol. 46(C).

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    More about this item

    Keywords

    Behavioral corporate finance; Initial Public Offering (IPO); Psychology of capital markets; Disposition effect; Corporate managers;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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