Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 19, 2019 erstellt
Description:
In this article, we study two negative events that can happen to newly public stocks: (1) the price drops at least 50% from the closing price on the first trading date within one year after the initial public offering (IPO) (initial failure) and (2) the firm is delisted for negative reasons within three years after the IPO (final failure). We find that high investor sentiment at the time of IPO can lead to both initial failure and final failure of IPO firms, whereas monitoring by external professionals plays a more important role in averting final failure than initial failure. Exploring the roles of different types of institutional investors, we find that transient (i.e., short-term trading) institutions sell before initial failure. In contrast, dedicated (i.e., monitoring) institutions focus on long-term performance and may stay with stocks suffering temporary initial failure, but their selling typically signals the imminent final failure of newly public firms