Are Hospitality Industry IPO Stock Returns Predictable?

Keywords

IPO, Hospitality, Restaurant, Hotel, Excess Returns

Abstract

We examine the post-IPO excess stock returns of hospitality firms from 1996 to 2012 and find underperformance 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 utilizing 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.

Publication Date

9-9-2014

Original Citation

Borghesi, R., Annaraud, K., & Singh, D. (2015). Are Hospitality Industry IPO Stock Returns Predictable? International Journal of Hospitality Management, 44, 23-27.

Number of Pages

23-27

Document Type

Paper

Language

English

Source Title

International Journal of Hospitality Management

Volume

44

College

Rosen College of Hospitality Management

Location

Rosen College of Hospitality Management

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