Are hospitality industry IPO stock returns predictable?

    Authors

    R. Borghesi; K. Annaraud;D. Singh

    Comments

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    Abbreviated Journal Title

    Int. J. Hosp. Manag.

    Keywords

    Hospitality; IPOs; Predictability; Overperformance; Free cash flows; Discretionary accruals; Altman's Z; INITIAL PUBLIC OFFERINGS; PERFORMANCE; Hospitality, Leisure, Sport & Tourism

    Abstract

    We examine the post-IPO excess stock returns of hospitality firms from 1996 to 2012 and find under-performance relative to the market on average. However, there are large differences in returns and some firms significantly outperform. We demonstrate that a substantial portion of this variation can be reliably predicted by utilising pre-IPO financial measures such as firm size, free cash flows, discretionary accruals, and Altman's Z. Our findings are potentially valuable to prospective hospitality IPO investors in selecting which stocks to buy and to hospitality firm managers in setting IPO issue prices. (C) 2014 Elsevier Ltd. All rights reserved.

    Journal Title

    International Journal of Hospitality Management

    Volume

    44

    Publication Date

    1-1-2015

    Document Type

    Article

    Language

    English

    First Page

    23

    Last Page

    27

    WOS Identifier

    WOS:000347365100003

    ISSN

    0278-4319

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