If you were to purchase the shares of a firm one month after its IPO as well as the shares of a comparable sized (matched)firm on the same day and then hold both shares for five years,you would expect

Question

Quizplus · Accepted Answer

Research has shown that, on average, the returns of IPO firms are lower than those of matched firms in the long run due to reasons such as overvaluation, underperformance, and increased competition. Therefore, one would expect the return of the matched firm's stock to be greater than that of the IPO firm.

If You Were to Purchase the Shares of a Firm