Short-Term and Long-Term Effect of Firms’ IPO on Competitors’ Performance

  • Nadia Marcha Chintya Universitas Prasetiya Mulya, Indonesia
  • Nadya Theodora Universitas Prasetiya Mulya, Indonesia
  • Vania Evelyn Universitas Prasetiya Mulya, Indonesia
  • Adrian Teja Universitas Prasetiya Mulya, Indonesia
Keywords: competitive effects, competitor performance, event study, initial public offering, information effects

Abstract

This study provides empirical evidence on the short term and the long term effects of initial public offering (IPOs) by firms, on their competitor firms’ performance in Indonesia. We perform short-run and long-run event studies and cross sectional regressions over the period 2010 to 2017 and find that both IPO firms and their competitors experience positive stock returns in the short-run and in the long-run. We find that IPO firms’ stock performance is relatively stable in the long-run that enables the competitor firms’ stock returns to catch up with IPO firms’ stock performance. We find negative effect of IPO firms’ stock performance on their competitors’ stock performance in the short-run, and a positive effect in the long-run. Our findings imply that IPO firms provide good information to the industry and no obvious competitive landscape changes are observed.

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Author Biographies

Nadia Marcha Chintya, Universitas Prasetiya Mulya, Indonesia

Student from finance department Universitas Prasetiya Mulya Indonesia

Nadya Theodora, Universitas Prasetiya Mulya, Indonesia

Student from finance department Universitas Prasetiya Mulya

Vania Evelyn, Universitas Prasetiya Mulya, Indonesia

Student finance department Universitas Prasetiya Mulya

Published
2020-02-28
How to Cite
Chintya, N., Theodora, N., Evelyn, V., & Teja, A. (2020). Short-Term and Long-Term Effect of Firms’ IPO on Competitors’ Performance. Journal of Finance and Accounting Research, 2(1), 1-1. https://doi.org/10.32350/JFAR/0201/05
Section
Articles