What causes hot markets for equity IPOs? An analysis of initial public offerings in the Netherlands, 1876-2015

This paper explains fluctuations in the number of initial public offerings (IPOs) between 1876 and 2015 in the Netherlands. We test an econometric model and find that the number of IPOs is strongly related to the economic growth and the size of the stock exchange. We also find that IPOs are timed to coincide with favorable market conditions. Our model explains almost 50 percent of the fluctuations and most of the hot markets. To further understand IPO waves, we conduct a descriptive analysis, which yields two additional causes for hot markets, i.e., high capital needs and investors' expectations for specific industries.