We investigate whether IPOs occurring during hot markets are fundamentally different from
those occurring during cold markets. Firms that go public during hot markets show lower
survival probability, shorter survival duration and worse long-run performance. When hot market
is separated into two periods, we find early issuers during hot markets (pioneers) have better
investment opportunities than late issuers during the same hot markets (followers). Furthermore,
pioneers show higher survival probability, longer survival duration, and better long-run
performance than followers. Our evidence shows that the inferior quality of followers is a major
contributor to the difference between hot and cold IPO markets.
JEL classification: C22, C41, C51, C52
Keywords: IPO issue cycles, Hot and cold markets, Pioneers
