BOHR International Journal of Finance and Market Research

The goal is to assess the short-term profitability of IPOs as well as the middle/long-term evolution of
this profitability. As a result, we evaluated short-term performance using both raw and adjusted beginning returns.
Cumulative abnormal returns and buy-and-hold abnormal returns were used to calculate long-term performance,
with abnormal returns adjusted for the market index and market model. We came to two primary findings by applying those methodologies to the eleven (11) IPOs that took place on the RSES between September 16th, 1998 and
December 31st, 2011. To begin, our data demonstrate that RSES IPOs had a large initial undervaluation throughout
this time time, and that the modification of early market index returns had a negative influence on them. Then, in
the medium/long run, holding these companies results in underperformance relative to the market portfolio. However, the long-term performance with buy-and-hold abnormal returns (BHARs) is less deteriorated than the one
with cumulative abnormal returns (CARs). Those results imply that, buying IPOs at the offer price is profitable to
investors in the short run and the holding of those stocks in the middle and long run must be done through the
buy-and-hold investment strategy.