The Effects of Primary and Secondary Equity Markets on Firm Performance

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 usesshare 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 hasat first negative effects thereafter affects performance positively and also there is a negative relationship between stock price informativeness and Sales-to-Assets.