COVID-19: Fear of pandemic and short-term IPO performance

Sharif Mazumder; Pritam Saha

doi:10.1016/j.frl.2021.101977

COVID-19: Fear of pandemic and short-term IPO performance

Financ Res Lett. 2021 Nov:43:101977. doi: 10.1016/j.frl.2021.101977. Epub 2021 Feb 12.

Authors

Sharif Mazumder^{1

2}, Pritam Saha³

Affiliations

¹ Oklahoma State University, Spears School of Business, Stillwater, OK, 74078, USA.
² Northern Kentucky University, Haile/US Bank College of Business, Highland Heights, KY 41076 , USA.
³ Texas Tech University, Rawls College of Business, Lubbock, TX, 79409, USA.

Abstract

This study analyzes the relationship between COVID-19 related fear and short-term IPO performance. Though the average market-adjusted initial return of IPOs in the year 2020 is higher than that of the last four decades, it decreases if fear of pandemic increases. The evidence is robust when we use matching firm-adjusted initial returns. Next, we analyze the persistence of performance after the IPO date. The results show that the performance of IPO firms is more sensitive to the fear of the pandemic than the performance of similar existing firms.

Keywords: Event study; Fear of COVID-19; Initial returns.