Short and long term price performance of initial public offerings: An application in Istanbul Stock Exchange

In this study, by using event study methodology, we examined short and long term price performance of IPOs occurred between the years 1998-2010 in Istanbul Stock Exchange. In that period we chose 126 firms to be examined and we calculated their short and long term price performance. First day, second day, first week and first month were chosen to be short term periods, while first, second and third years were chosen to be long term periods and their buy-and-hold returns were calculated. We found short term abnormal returns for whole sample 7,61%, 12,74%, 16,66% and 18,58% for periods of first day, second day, first week and first month relatively. For long term, we found buy-and-hold abnormal returns -1,17%, -9,3% and -31,65% for periods of first, second and third year relatively. We also examined abnormal returns of sectors in which sample firms are operated. Best price performances were seen in "other sectors" group for both short and long term. On the other hand, technology sector group generated worst returns for both short and long term. At the end, we first split the sample based on firms' first day returns, and then compared their long term returns by using two different methods. For each method, we found adverse results.