Leverage, liquidity and IPO long-run performance: evidence from Taiwan IPO markets

Anlin Chen; Li-Wei Chen; Lanfeng Kao

doi:10.1108/18347641011023261

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International Journal of Accounting and Information Management

ISSN: 1834-7649

Online from: 2007

Subject Area: Accounting and Finance

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Leverage, liquidity and IPO long-run performance: evidence from Taiwan IPO markets

Document Information:
Title:	Leverage, liquidity and IPO long-run performance: evidence from Taiwan IPO markets
Author(s):	Anlin Chen, (Department of Business, National Sun Yat-Sen University, Kaohsiung, Taiwan), Li-Wei Chen, (Department of Business, National Sun Yat-Sen University, Kaohsiung, Taiwan), Lanfeng Kao, (Department of Finance, National University of Kaohsiung, Kaohsiung, Taiwan)
Citation:	Anlin Chen, Li-Wei Chen, Lanfeng Kao, (2010) "Leverage, liquidity and IPO long-run performance: evidence from Taiwan IPO markets", International Journal of Accounting and Information Management, Vol. 18 Iss: 1, pp.31 - 38
Keywords:	Financial markets, Financial performance, Investments, Return on investment, Taiwan
Article type:	Research paper
DOI:	10.1108/18347641011023261 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Abstract:	Purpose – The purpose of this paper is to examine the long-run performance of initial public offerings (IPOs) in Taiwan with a five-factor model on a calendar time basis. Design/methodology/approach – Besides the Fama-French three factors, the paper also incorporates leverage and liquidity into the factor model to measure IPO five-year performance. The sample consists of 261 IPOs issued in Taiwan over-the-counter during 1991 and 2002. The actual data cover the period from January 1991 to December 2007. Findings – Contrary to findings of previous studies on US IPO markets, the paper finds that Taiwan IPOs experience better long-run performance than the market even after adjusting for the common factors in the capital markets. Originality/value – This paper argues that survival rate of Taiwan IPOs would be the reason why Taiwan IPOs do not underperform in the long run.