IPO waves: How market performances influence the market timing of IPO?

Abstract

The goal of this paper is to study the impact of stock markets on Initial Public Offerings (IPOs). Several studies have shown that the need for financing is not the main trigger for an IPO— favorable market conditions may play a more important part. This work prove the existence of a significate relationship between past stock market returns and the number of IPOs. Before setting the date for an IPO, managers analyze long term financial market yields, a bullish stock market over a six month/ one year period encourages IPOs activities. In the other hand, even a negative performance but over a two-year period may have the same effect. They expect a stock market inversion. These results were obtained by autocorrelation analysis and count regression.