Unlocking the puzzle: assessing underpricing and long-term performance of foreign IPOs on US stock exchanges

Abstract

This thesis examines underpricing and long-term performance of foreign IPOs listed on US stock exchanges and domestic US IPOs. Additionally, it investigates the impact of home coun try economic freedom on IPO performance, finding that this factor is only in the short-term significant. Using a Bloomberg dataset covering IPOs from 2000 to 2020, the study reveals that foreign IPOs experience slightly lower levels of underpricing than domestic IPOs (11.47% vs. 13.11%). In the long-run, both significantly underperform the market, but international IPOs (-39.70%) by a greater margin than domestic ones (-21.60%). These findings offer insights into home bias and market efficiency.