Long-run performance of global versus domestic initial public offerings

This paper investigates the long-run performance of global IPOs as compared to purely domestic ones made by US industrial companies. We find that global IPOs not only underperform the market but also underperform their domestic counterparts in the three years after issuance. Moreover, global issues with a larger global tranche are more prone to long-run underperformance. The results are consistent with the window of opportunity hypothesis that investors are overly optimistic about the future prospects of firms engaging in global offerings, and underperformance occurs as unduly high expectations are corrected over time.