Is there still a Berlin Wall in the post-issue operating performance of European IPOs?

This paper studies the post-IPO operating performance of a sample of 555 European firms that went public between 1995 and 2006. Consistent with previous findings, we observe a decline in post-issue operating performance of IPO firms. However, firms located in emerging European countries perform even worse after the IPO than firms located in developed European countries. Our results suggest that this less successful post-issue operating performance by firms located in emerging countries can be explained by a more aggressive use of accruals and a better timing of the IPO in order to coincide with a period of high operating performance.