Post-IPO performance when analysts report a first-mover advantage

We identify IPO firms with a first-mover advantage through a textual analysis of initiating coverage reports. We observe that such firms are smaller, go public much earlier, and are more likely to be venture capital backed than other IPO firms. Their issues are more heavily clustered in industry and time as well. We find that possessing a first-mover advantage is positively related to post-IPO operating performance. Finally, while affiliated analysts are more likely to mention a first-mover advantage in their reports than unaffiliated analysts, we do not observe that they are overly optimistic about IPO firms’ potential gains from being a first mover.