IPO volume fluctuates substantially over time.
Airbnb is gearing up to be the most anticipated IPO of 2020, here's why
This paper compares the extent to which the aggregate capital demands of private firms, the adverse-selection costs of issuing equity, and the level of investor optimism can explain these fluctuations. Empirical tests include both aggregate and industry-level time-series regressions using proxies for the above factors and an analysis of the relation between post-IPO stock returns and IPO volume. Results indicate that firms’ demands for capital and investor sentiment are important determinants of IPO volume, in both statistical and economic terms.
Adverse-selection costs are also statistically significant, but their economic effect appears small.
Journal of Financial Economics – Elsevier
Published: Jan 1, 2003