Long-Run Price and Operating Performance of Initial Public Offerings in Borsa Istanbul

This study investigates long-run price and operating performance of initial public offerings (IPOs) in Borsa Istanbul. The sample period of the analysis is between 2010 and 2019. Various findings are obtained by employing several analytical methods. First, long-run price performance of IPOs is negative. Evidence shows that large issues are likely to have relatively higher long-run returns than smaller issues. On the other hand, if an issue is made in a hot-issue period, it is likely to have relatively more severe underperformance in the long-term. Second, long-run operating performance is also negative. Third, the relationship between long-run abnormal price performance and operating performance is significantly negative when asset efficiency or return on equity are used as a measure of operating performance. The higher the issuing company's asset efficiency or equity efficiency is, more likely it is to have a severe abnormal price underperformance in their post-IPO years. This finding is weaker for return on equity, the explanatory power of return on equity may be seized by capital increase ratio in some model specifications. These results together support “windows of opportunity” theory of price and operating performance of IPOs.