Are initial public offerings significant to firm performance in an emerging stock market? : evidence from China

Purpose: This study investigates firm performance after going public and explores whether Initial Public Offerings (IPOs) contribute to it. Design/methodology/approach: This study employs comprehensive regression models to examine IPO significance to both operating performance and market performance. Findings/results: It suggests that IPO firms retain their growth over the first 3 years after going public, but the growth does not sustain after the third year in terms of profit-related indicators, which is distinguishing from prior research. IPOs may contribute to firms' market performance only, they are insignificant to firms' operating performance in general, whilst industry-adjusted evidence suggests that IPOs are negatively associated with operating performance in terms of return on assets, return on sales and debt to assets. Practical implications: The practical implication for managers is to spend more IPO capitals on business operations to maximise firm value. Originality/value: Market value is taken into account, whilst operating performance is considered only by prior research, and it presents some different findings from prior studies based on developed stock markets.