School of Business

A Comparison of Reverse Leveraged Buyouts and Original Initial Public Offers Factors Impacting Their Issuance in the IPO Market

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Description: This paper seeks to assess the factors that affect the returns earned by investors in early trading of reverse LBOs and compare those results to factors affecting original IPOs which are matched by size, industry and issue date. A mean excess return of 7.64% is observed for the sample of reverse LBOs during the period 1987 to 1998. This return is uniformly lower than returns earned by investing in original IPOs. These results support the information asymmetry hypothesis. Other results from the study are also examined.
Format: Article