Abstract:
Performance of IPO stocks is determined by the returns on a firm’s IPOs and other subsequent issues.
Returns are derived from the price swings (volatility) as compared to the offer price so that a
favourable swing indicates favourable returns and vice-versa. In the light of this, we review models
and empirical works that try to explain these swings and their consequence on the IPOs performance
to hypothesize that IPO stocks performance swing (return volatility) is inevitable as far
as a real efficient market cannot exist except in a world of utopia. Evidences from the previous
studies show that one reason or the other must be achieved or committed to get the IPO stocks
marketed at the instance of the issue which subsequently keep influencing the same stocks even in
the secondary market over a very long period of time even though at a minimum volatile rate but
not completely eliminated. This is what we regard as stocks performance imperfection.
