Does going global or staying local improve the long‐term survival and performance of IPOs?

• Date: 01 November 2018
• Author: Stephen E. Christophe,Hun Lee
• Published date: 01 November 2018
• DOI: http://doi.org/10.1002/gsj.1188

RESEARCH ARTICLE

Does going global or staying local improve

the long-term survival and performance of IPOs?

Stephen E. Christophe | Hun Lee

School of Business, George Mason University,

Fairfax, Virginia

Correspondence

Hun Lee, School of Business, George Mason

University, 4400 University Drive, MS 5F5,

Fairfax, VA 22030.

Email: hleeb@gmu.edu

Research Summary: This empirical study investigates

the impact of internationalization on the long-term perfor-

mance of U.S. IPOs (initial public offerings). We find

that internationalized IPOs exhibit higher survival rates,

and if an internationalized IPO is subsequently delisted,

that delisting is significantly more likely to result in a

positive outcome when compared to the delisting out-

comes for domestic-only IPOs. In addition, over 5- and

10-year holding periods following the IPO, a portfolio of

the internationalized firms exhibits significantly positive

risk-adjusted abnormal stock returns, whereas the return

for a portfolio of the domestic-only firms was lower and

generally not significantly different than zero. In short,

we add to the existing literature on factors that influence

IPO survival and performance and show that internation-

alization also is an important firm characteristic.

Managerial Summary: We examine the impact of inter-

nationalization on the survival and stock return perfor-

mance of IPO firms. More specifically, we investigate the

performance of two categories of U.S. IPOs: companies

that go public and have international operations and com-

panies that are purely domestic firms. Our results suggest

that IPO firms that are internationalized have higher sur-

vival rates than domestic-only firms and also enjoy supe-

rior subsequent stock performance. This study provides

novel insights and additional descriptive evidence that

going global is better for the survival and performance

of IPOs.

KEYWORDS

initial public offering, internationalization, performance,

stock returns, survival

Received: 15 September 2016 Revised: 26 October 2017 Accepted: 28 October 2017

DOI: 10.1002/gsj.1188

Copyright © 2017 Strategic Management Society

Global Strategy Journal. 2018;8:563–577. wileyonlinelibrary.com/journal/gsj 563