Is the IPO Anomaly in Poland Only Apparent or Real?

Abstract

Market anomalies have absorbed many academics and investors. Uncovering puzzling results is still an attractive research task. Anomalies are perceived as empirical findings inconsistent with accepted asset pricing models. Many of them were found illusory, and appeared to be not robust to the methodology, sample or period choice. Some anomalies weakened substantially, reversed themselves, disappeared or even reappeared after some time. There have been anomalies that have fascinated economists from all over the world. One of these was the short-term underpricing and long-term underperformance phenomenon observed after initial public offerings (IPOs). Are IPOs really offering investors an unfailing opportunity to earn money at the moment of going public, resulting in a huge amount of money being left on the table by the issuing firms? Is investing in IPO firms in the long run an easy way to lose money? Are the short- and long-term abnormal returns robust enough to become recognised as statistically and economically significant? The research aimed to answer the questions using a broad set of benchmarks and empirical approaches. The study comprised of all of the non-financial firms that made their initial public offering on the Warsaw Stock Exchange between 1995 and 2013.