Institutional affiliation and the role of venture capital: Evidence from initial public offerings in Japan

We investigate the relationship between underwriter reputation and earnings management of IPO firms over the period of 1991-2005. We find that IPO firms engage in less earnings management if they are underwritten by prestigious investment bankers. Furthermore, the role of prestigious underwriters in restraining earnings management of IPO issuers do not change during the Internet Bubble period or after the passage of the Sarbanes-Oxley Act (SOX). The findings support the certification role of underwriters in the IPO process. We also document that firms going public in the post-SOX period engage in less earnings management compared to firms going public in the pre-SOX period. Further findings suggest that the changing objectives of venture capitalists may explain the reduction in the level of earnings management of IPO firms following the passage of SOX.

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The Role of Private Equity in Initial Public Offerings

Private Equity ◽

10.1093/acprof:oso/9780199375875.003.0012 ◽

2015 ◽

pp. 200-214

Author(s):

Shantanu Dutta ◽

Arup Ganguly ◽

Lin Ge

Keyword(s):

Initial Public Offerings ◽

Private Equity ◽

Public Offerings

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Die Fehlbewertung junger Aktiengesellschaften beim Gang an die Börse – Ursachen und wirtschaftspolitische Konsequenzen

Zeitschrift für Wirtschaftspolitik ◽

10.1515/zfwp-2003-0108 ◽

2003 ◽

Vol 52 (1) ◽

Author(s):

Christine Ploog ◽

Michael Stolpe

Keyword(s):

Market Power ◽

Initial Public Offerings ◽

Investment Banks ◽

Policy Options ◽

Public Offerings ◽

Speculative Bubbles ◽

Privatisation Programme ◽

Welfare Implications

AbstractThis paper discusses policy options to reduce underpricing in initial public offerings (IPOs). It surveys recent theoretical insights into the causes and welfare implications of underpricing and reviews evidence on the signalling hypothesis, the winner’s curse model, the role of underwriters in assessing issuing firms’ future profitability and the genesis of speculative bubbles in IPO markets. The paper concludes that governments should curtail the abuse of market power in underwriting by prohibiting the allocation of shares to insiders and by reducing the incentives for investment banks to exploit underpriced share issues in order to cross-subsidise unrelated lines of business. Moreover, governments should seek to stabilize the IPO market by committing themselves to regular equal-sized issues of shares in government assets as part of a long-term privatisation programme.

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The Role of the Media in the Internet IPO Bubble

Journal of Financial and Quantitative Analysis ◽

10.1017/s0022109009990056 ◽

2009 ◽

Vol 44 (3) ◽

pp. 657-682 ◽

Cited By ~ 102

Author(s):

Utpal Bhattacharya ◽

Neal Galpin ◽

Rina Ray ◽

Xiaoyun Yu

Keyword(s):

Initial Public Offerings ◽

Good News ◽

News Item ◽

The Internet ◽

Public Offerings ◽

Share Prices ◽

Dramatic Rise ◽

The Media ◽

Media Hype

AbstractWe read all news items that came out between 1996 and 2000 on 458 Internet initial public offerings (IPOs) and a matching sample of 458 non-Internet IPOs (a total of 171,488 news items) and classify each news item as good news, neutral news, or bad news. We first document that the media were more positive for Internet IPOs in the period of the dramatic rise in share prices and more negative for Internet IPOs in the period of the dramatic fall in share prices. We then document that media hype is unable to explain the Internet bubble: A 1,646% difference exists in returns between Internet stocks and non-Internet stocks from January 1, 1997, through March 24, 2000 (the market peak), and the media can explain only 2.9% of that.

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The control-ownership wedge and the survival of French IPOs

Journal of Applied Accounting Research ◽

10.1108/jaar-02-2017-0027 ◽

2018 ◽

Vol 19 (2) ◽

pp. 271-294 ◽

Cited By ~ 3

Author(s):

Imen Derouiche ◽

Syrine Sassi ◽

Narjess Toumi

Keyword(s):

Survival Time ◽

Initial Public Offerings ◽

Failure Time ◽

Vote Rule ◽

Agency Conflicts ◽

Content Type ◽

Controlling Shareholders ◽

Public Offerings ◽

The One

Purpose The purpose of this paper is to investigate the effect of the control-ownership wedge of controlling shareholders (excess control) on the survival of French initial public offerings (IPOs). Design/methodology/approach This paper studies a large sample of 434 French IPOs. The empirical analysis uses the Cox proportional hazard and accelerated-failure-time models. Data are manually gathered from IPO prospectuses. Findings The findings support a positive relation between the control-ownership wedge and IPO survival time, indicating that survival is more likely in firms with high excess control levels. This result is consistent with the view that controlling shareholders with a large control-ownership wedge have incentives to preserve their private benefits of control by increasing firm survival chances. The findings also show that older IPOs are more likely to survive, while riskier and underpriced IPOs are more likely to delist. Practical implications The results provide a better understanding of the role of excess control in IPO survival. They also enrich the debate on the efficiency of the one-share-one-vote rule. Originality/value The research provides new insights into the role of agency conflicts in IPO survivability. In particular, it explores the effect of dominant shareholders with a control-ownership wedge on survival time.

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