The Effects of Primary and Secondary Equity Markets on Firm Performance

Document Type : Original Article

Authors

1 Assistant Prof, Department of Financial Management, Kharazmi University, Tehran, Iran.

2 MSc. In Financial Management, Kharazmi University, Tehran, Iran.

3 MSc. In Financial Management, Kharazmi University, Tehran, Iran

Abstract

     This paper investigates the effects of primary and secondary equity markets on Tehran Stock Exchange’s firms’ performance after IPO in an integrated framework; because both markets interact closely in reality and firms are affected by both. This paper uses share sold by initial owners in IPO as proxy for primary market and investment-to-price sensitivity and stock price informativeness as proxies for secondary market. This paper also utilizes EBIT-to-Assets, Sales-to-Assets and Net income-to-Assets as proxies for firm’s performance. A non-parametric quantile regression is employed for 51 firms over the period of 2001-2019. The results show that if we consider shares sold by initial owners as primary market, this factor does not affect firm’s performance; while in the secondary market, investment-to-price sensitivity has at first negative effects thereafter affects performance positively and also there is a negative relationship between stock price informativeness and Sales-to-Assets.

Keywords

References

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Financial Management Perspective
Volume 9, Issue 28 - Serial Number 28
December 2019
Pages 91-116

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