Date of Conferral
Doctor of Business Administration (D.B.A.)
This study examined the relationship between return on equity (ROE) and return on assets (ROA), the business sector, and long-term performance of new firms 5 years after the initial public offer (IPO) date. IPOs have a high rate of delisting from stock exchanges, and understanding possible predictors of long-term performance will benefit business owners and investors. The purpose of this study was to determine if ROE and ROA are predictors of long-term performance of IPOs on U.S. stock exchanges. The research question examined whether there is a statically significant relationship between the ROE, ROA, business sector, and market capitalization of IPOs. This study followed a correlational design to analyze the research question and its hypotheses. Both shareholder theory and financial ratio models constituted the theoretical framework for this study; public databases provided all the historical financial data on publicly traded companies. The population for this study included all firms that pursued an IPO within the United States stock exchanges from January 2007 through December 2009. Using Spearman correlations, the results suggested no significant relationship between ROE and any business sector with market capitalization of IPOs. However, there was a significant correlation with ROA and market capitalization for these IPOs. The implications for positive social change in this study are new insights for leaders concerning the survivability and monetary gain for new firms entering the public market and the new firm's ability as a result of this gain to provide new jobs thereby improving the economy.
Donaldson, Michael Wayne, "Examining the Relationship between Selected Ratios and Market Capitalization of an IPO" (2015). Walden Dissertations and Doctoral Studies. 1821.