The really long-run performance of initial public offerings: The pre-Nasdaq evidence

Financial economists have intensely debated the performance of IPOs using data after the formation of Nasdaq. This paper sheds light on this controversy by undertaking a large, out-of-sample study: We examine the performance for five years after listing of 3,661 U.S. IPOs from 1935 to 1972. The sample displays some underperformance when event-time buy-and-hold abnormal returns are used. The underperformance disappears, however, when cumulative abnormal returns are utilized. A calendar-time analysis shows that over the entire period, IPOs return as much as the market. The intercepts in CAPM and Fama-French regressions are insignificantly different from zero, suggesting no abnormal performance.