Abstract:

The purpose of this study is to analyze relationship between initial returns and long-run price performances of initial public offerings (IPOs) that have taken place in Turkey in the period of January 1994-December 2009. The long-run price performances of IPOs is to examine according to the both Cumulative Abnormal Return and Buy and Hold Return methods. Obtained results demonstrate that underpricing level of IPOs taken place in Turkey is high and investors provide positive return in first day trading. Manufacturing industry sector has been determined as sector investors are obtained highest initial return in first trading day. IPOs providing high return to investors in first trading day have shown high performance according to the CAR method, low performance according to the BHR method in the long run. Consequently, underpriced IPOs have shown higher performance according to overpriced IPOs in first day trading

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