IPO Anomalies: Impact on the Efficiency of Initial Public Offerings

Abstract

The article explores the significant role of anomalies in the market for initial public offerings (IPOs), affecting both short-term and long-term stock outcomes upon entering the public market. It addresses the overarching issue faced by investors regarding the low efficiency of IPOs, characterized by a decline in securities’ value immediately after public listing. The article examines various anomalies and factors affecting IPO outcomes and discusses strategies for successful risk management and achieving desired investment results. It highlights the importance of considering underexplored aspects such as financial reporting distortions, information asymmetry, and insider manipulations, which are often encountered in IPOs but rarely studied in depth. This investigation into IPO anomalies aims to provide investors and companies with insights for making more informed decisions during IPOs and adapting their strategies according to market conditions, thereby contributing to a broader understanding of factors affecting IPO profitability. By recognizing and addressing these factors, investors and companies can better navigate the IPO process and achieve more favorable outcomes. Further research is needed to delve deeper into the complexities of IPO anomalies and their implications for market efficiency.