Age, Size, and Sectors in IPO Performance: A Comprehensive Analysis

This study offers a fresh perspective on the stock price performance of firms that went public through IPOs between 2009 and 2019. It examines the impact of their size, age and economic sector on future performance. The analysis encompasses data from 1611 IPOs spanning across 11 economic sectors, employing the event study method. The findings provide substantial evidence that a firm's size and age serve as predictors for both short-term and long-term price performance. In addition, there is a significant variation in the long-term performance between sectors and between small and large firms within each sector, with smaller firms exhibiting more pronounced underperformance over time. This phenomenon can be attributed to differences in publicly available information, perceived risk, and resource availability between older, larger firms and their younger, smaller counterparts. Notably, the study reveals distinct sector-specific patterns in the age of firms going public. There is a clear tendency for firms in the healthcare and technology sectors to go public at a relatively younger age than those in other sectors, highlighting the strategic advantages of early IPOs for these domains. These findings hold implications for asset pricing and offer valuable insights for investors engaged in IPOs.