The paper studies the operating performance of more than 1340 IPO firms in Taiwan from 1994 through 2005. The paper investigates the change in operating performance of firms as they make the transition from private to public ownership. We examine whether the operating performance of 1340 IPO firms in Taiwan from 1994 through 2005 deteriorated. First, by using Wilcoxon signed rank test, we find significant decline in operating performance subsequent to the initial public offering (IPO). Second, by using dynamic factor analysis, we find that IPO firms deteriorate after going public especially in construction, communication, and network modem industry. Using ten industries as variables, it becomes clear that the three measures of return on assets, gross margin, and earnings before tax margin have the tendency to perform better before going public then perform worse after going public.