Newly listed firms tend to perform relatively poorly in the three to five years after their IPOs.

Question

Quizplus · Accepted Answer

This phenomenon is known as the " IPO underperformance puzzle" and is supported by various studies and research. The reasons for this underperformance could be attributed to various factors such as overvaluation, lack of experience in managing a public company, and pressure to meet short-term expectations from investors. However, some firms may buck the trend and perform well after the IPO.

Newly Listed Firms Tend to Perform Relatively Poorly in the Three