TY  - JOUR
AU  - Pastor,Lubos
AU  - Veronesi,Pietro
TI  - Stock Prices and IPO Waves
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9858
PY  - 2003
Y2  - July 2003
UR  - http://www.nber.org/papers/w9858
L1  - http://www.nber.org/papers/w9858.pdf
N1  - Author contact info:
Lubos Pastor
University of Chicago
Booth School of Business
5807 South Woodlawn Ave
Chicago, IL  60637
Tel: 773/834-4080
Fax: NA
E-Mail: lubos.pastor@chicagobooth.edu

Pietro Veronesi
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL  60637
Tel: 773/702-6348
Fax: 773/702-0458
E-Mail: pietro.veronesi@chicagobooth.edu
AB  - We develop a model of stock valuation and optimal IPO timing when investment opportunities are time-varying. IPO waves in our model are caused by declines in expected returns, increases in expected profitability, or increases in prior uncertainty about average profitability. The model predicts that IPO waves are preceded by high market returns, followed by low market returns, and accompanied by high stock prices. These as well as other predictions are supported empirically. Stock prices at the peak of the recent  bubble', which was associated with an IPO wave, are consistent with plausible parameter values in our rational valuation model.
ER  -