The Long-term performance of Initial Public Offering

Journal of Finance, JAY R. Ritter (1991)

The underpricing of initial public offerings (IPOs) that has been widely documented
appears to be a short-run phenomenon. Issuing firms during 1975-84 substantially
underperformed a sample of matching firms from the closing price on the first day
of public trading to their three-year anniversaries. There is substantial variation in
the underperformance year-to-year and across industries, with companies that went
public in high-volume years faring the worst. The patterns are consistent with an
IPO market in which (1) investors are periodically overoptimistic about the earnings
potential of young growth companies, and (2) firms take advantage of these
"windows of opportunity,"

Although a bit old, a very classical paper