We study the effect of investment horizon clienteles on the IPO market. We start from the premise – that we support with evidence – that IPO stocks are very liquid in the after-market. Therefore, short-term investors should have a higher reservation price for them than long-term investors....

We study how the heterogeneity in investment horizons of institutional investors affects the IPO market. We document the fact that short-term investors prefer more liquid stocks than long-term investors do and that IPO stocks are very liquid in the after-market. On this premise, we argue that...