Abstract:

This paper examines the driving factors of the aftermarket liquidity of the IPOs. Our study focuses on the US companies from software industry over the period January 2006 – December 2020. Based on an OLS regression approach, we show that the state of the market impacts the aftermarket liquidity of the IPO. In particular, an optimism state of the market increases the aftermarket liquidity of the IPO. Moreover, we confirm prior literature that showed that underpricing significantly influences aftermarket liquidity of the IPO. Our findings provide a better understanding of the determinants of the liquidity of IPOs, offering valuable insight for investors due to their implications in asset pricing. Our results are also important for policymakers and regulators.