Moderating effect of investor demand: privatized IPOs and flipping activity in the Pakistan IPO market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayesha Anwar ◽  
Rasidah Mohd-Rashid
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
High Volume ◽  
Least Square ◽  
Valuable Insight ◽  
Trading Behavior ◽  
Content Type ◽  
Public Offerings ◽  
Price Performance ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of privatized initial public offerings (IPOs) on flipping activity in the Pakistan IPO market. Design/methodology/approach This study sampled 95 IPOs listed on the Pakistan stock exchange over the period of 2000 to 2019. The ordinary least square technique and quantile regression were used to examine the impact of privatized IPO on flipping activity. Findings The present study finds that privatization affects flipping activity and creates a quality signal in Pakistan’s IPO market. The findings of this study also show that privatized IPOs were subjected to high levels of flipping activity compared to non-privatized IPOs. Additionally, investors’ demand has been found to moderate the relationship between privatized IPOs and flipping activity in Pakistan’s IPO market. Research limitations/implications Based on the fact that the sample consists of a combination of privatized and non-privatized IPOs, the results provide valuable insight into factors that may lead to unusual trading behavior/flipping during the first day of listing. Originality/value Despite several studies on events (e.g. short- and long-term price performance) around IPO, there is little evidence on how privatized IPOs affect flipping activity, which is a high volume of trading immediately after listing.

IPO valuation using the price-multiple methods: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chui Zi Ong ◽  
Rasidah Mohd-Rashid ◽  
Kamarun Nisham Taufil-Mohd
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Least Square ◽  
Multiple Methods ◽  
Cross Sectional ◽  
Ols Regression ◽  
Content Type ◽  
Public Offerings ◽  
Ordinary Least Square ◽  
Valuation Method

Purpose This study aims to investigate the valuation accuracy of Malaysian initial public offerings (IPOs) by using price-multiple methods. Design/methodology/approach Cross-sectional data including 467 IPOs listed on the Malaysian stock exchange were used for the period of 2000–2017. This study used univariate ordinary least square (OLS) regression to analyse the relationship between IPOs’ price-multiples and comparable firms’ price-multiples. The test of valuation accuracy was conducted via computing valuation errors by segregating the sample into two groups: fixed-price IPOs and book-built IPOs. Furthermore, multiple OLS regression was used to examine the influence of IPO valuation on underpricing. Findings The findings of the results suggested that IPOs price-to-earnings (P/E), price-to-book (P/B) and price-to-sales (P/S) multiples were positively related to the median P/E, P/B and P/S multiples of five comparable firms matched by industry and revenues. The P/S multiple was shown to be the most significant valuation method, specifically in book-built IPOs. The findings indicated that those firms that had a lower valuation in comparison to the comparable firms were inclined to underprice their IPOs to allure investors to subscribe IPOs. In addition, book-built IPOs that had fair valuations were inclined to generate higher initial returns for investors. Practical implications The findings of this study observed implications for underwriters in avoiding the mis-valuation issue by considering the book-building mechanism. Originality/value This study attempted to explore the suitability of the valuation method to value IPOs in Malaysia.

Impact of pricing mechanism on IPO oversubscription: evidence from Pakistan stock exchange

2020 ◽  
Vol 32 (2) ◽  
pp. 239-254 ◽  
Author(s):  
Waqas Mehmood ◽  
Rasidah Mohd-Rashid ◽  
Abd Halim Ahmad
Keyword(s):  
Initial Public Offerings ◽  
Robust Regression ◽  
Stock Exchange ◽  
Least Square ◽  
Cross Sectional ◽  
Content Type ◽  
Public Offerings ◽  
Ordinary Least Square ◽  
Pricing Mechanism ◽  
Available Information

Purpose The purpose of this paper is to examine the effects of pricing mechanism on initial public offerings (IPOs) oversubscription in Pakistan. Design/methodology/approach This study used cross-sectional data to analyse 85 listed IPOs on the Pakistan stock exchange during the period of 2000-2017 to assess hypotheses related to influential determinants of IPO oversubscription. Accordingly, ordinary least square, robust regression and quantile regression approaches were applied in this study to evaluate the factors that influenced oversubscription. Findings The outcome displayed pricing mechanism is negatively significant with an oversubscription of IPOs. This indicates firms using the fixed-price mechanism signalled higher information asymmetry and uncertainty in their value. Thus, investors are aware that they will be offset with underpricing, and it is expected the demand will be higher for the particular IPOs. Research limitations/implications This study is entirely focused on the available information of prospectus that should not be ignored by potential investors at the time of subscription of IPO. Therefore, the study contributes to extending the available literature in signalling theory whereby issuers should consider using the book-building pricing mechanism in enhancing the efficiency of the IPO offer price during the listing. Originality/value This paper provides evidence for the determinants of the IPO oversubscription.

Do sponsors and democratic government influence the flipping activity of Pakistan IPO? Evidence from developing market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayesha Anwar ◽  
Rasidah Mohd-Rashid ◽  
Norliza Che Yahya ◽  
Chui Zi Ong
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Accurate Information ◽  
Cross Sectional ◽  
Content Type ◽  
Democratic Government ◽  
Public Offerings ◽  
Trading Volumes ◽  
The Impact ◽  
The Relationship

Purpose This study aims to examine the impact of sponsors and democratic government on the flipping activity of initial public offerings (IPOs). Design/methodology/approach Based on the sample of 95 IPOs listed on the Pakistan Stock Exchange between January 2000 and December 2019, this study used multiple cross-sectional regression to examine the relationship between sponsors and democratic government on flipping activity. Findings The findings indicate a significant negative association between sponsors and the flipping activity of IPOs. Sponsor(s) signal quality by trying to share accurate information about company values. As a result, the confidence of rational investors in the company’s future prospectus increases and they hold their shares for future gains, which reduces the flipping activity. Also, democratic government, along with sponsors' participation, provides investors with liquidity immediately after listing. Practical limitations/implications The findings of this study have implications for investors as they may assist them make informed decisions about whether or not to invest in an IPO with high sponsor(s) ownership. In addition, issuers should consider the disclosure of sponsor information(s) as such information may directly affect the first day’s trading volumes. Originality/value To the best of the authors’ knowledge, this is the first research study that explores the correlation between sponsors and democratic government and flipping activity of IPO. This study is important for investors and issuers.

Do Prestigious Underwriters Shape the Performance of SME IPOs in India?

2020 ◽  
pp. 097215092096321
Author(s):  
Nischay Arora ◽  
Balwinder Singh
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Least Square ◽  
Public Offerings ◽  
Least Square Regression ◽  
Long Run ◽  
Medium Enterprise ◽  
Underwriter Reputation ◽  
Ordinary Least Square Regression ◽  
The Impact

The present article aims to examine the impact of underwriter reputation on underpricing and long-run returns of small- and medium-sized enterprise (SME) initial public offerings (IPOs) over a 12-month period in an emerging country like India on a sample of 403 IPOs issued from 2012 to 2018 and subsequently listed on Bombay Stock Exchange (BSE) small and medium enterprise (SME) platform and National Stock Exchange (NSE) EMERGE. However, the migration of 27 SME IPO companies to main platform has resulted in reduced sample size of 376 IPOs for measuring long-run performance. The current study has utilized ordinary least square regression technique to investigate the concerned relationship. The robustness of the findings has been further ensured by checking for endogeneity bias using two-stage least square regression (2SLS). The results unveil that while underwriter reputation positively influences underpricing of SME IPOs, it has no significant impact on their long-run performance. This analysis may provide some meaningful information for policymakers responsible for reforms of Indian equity market. For SME issuers, the findings may provide some insights on the importance of hiring reputed underwriters in IPO process. The results may further assist the investors in improving their equity valuation and taking informed investment decisions.

scholarly journals Short-run price performance of IPOs and corporate governance practices: Evidence from a frontier market

2018 ◽  
Vol 2 (1) ◽  
pp. 34-42 ◽  
Author(s):  
SMRK Samarakoon ◽  
KLW Perera
Keyword(s):  
Corporate Governance ◽  
Initial Public Offerings ◽  
Negative Impact ◽  
Stock Exchange ◽  
Sri Lankan ◽  
Governance System ◽  
Public Offerings ◽  
Price Performance ◽  
Governance Practices ◽  
Short Run

The short-run price performance of Initial Public Offerings (IPOs) indicates that the prices are often underpriced which is widely documented as a universal phenomenon. Corporate governance refers to the set of systems, principles and processes by which a company is governed. Establishing good corporate governance system in an IPO company makes good decisions which attract more outside investors. Therefore, this study examines whether there is any impact of corporate governance practices on short-run price performance of Sri Lankan IPOs. Study examined 44 fixed price IPOs which were listed on the Colombo Stock Exchange (CSE) during the period of 2003 – January to 2015- December. The study found that Sri Lankan IPOs underprice by 30% on AR, which is statistically significant at 5% level. Further, it found that block holder ownership (ownership concentration), CEO duality and existence of the non-executive directors in the board are positively related to the short-run underpricing, which are statistically significant at 5%. But, the board size has a significant negative impact on underpricing. These relationships are in line with the international literature which confirms that the corporate governance practices have significant impact on short-run price performance of IPOs in Sri Lanka. These findings also support the agency and signaling theories.

Initial public offerings and air pollution: evidence from China

2015 ◽  
Vol 9 (1) ◽  
pp. 99-114 ◽  
Author(s):  
Yan Luo ◽  
Xiaolin Qian ◽  
Jinjuan Ren
Keyword(s):  
Air Pollution ◽  
Corporate Governance ◽  
Initial Public Offerings ◽  
Ambient Air ◽  
Environmental Conservation ◽  
Policy Implications ◽  
Chinese Government ◽  
Content Type ◽  
Public Offerings ◽  
The Impact

Purpose – The purpose of this study is to investigate the impact of firms’ financing activities on the environment. Faced with a deteriorating global environment, both corporations and regulatory bodies have become more responsive to environmental conservation problems. However, existing literature has not adequately addressed the question of whether and how firms’ business activities influence the environment. Design/methodology/approach – Using the daily air pollution indices of 120 Chinese cities from 2001 to 2012, this study found that air pollution is alleviated after firms’ initial public offerings (IPOs). This paper proposes that firms’ IPOs influence the ambient air pollution through three channels: production scale, technical reform and corporate governance effects. Findings – The authors of this study found that the proceeds acquired in IPOs result in enlarged production scales that increase pollution, while the investment of these proceeds in social responsibility-related technical reform and enhanced corporate governance reduce pollution. Moreover, the authors discover that firms with a higher state ownership emit fewer pollutants, thus supporting the positive monitoring role of the Chinese government. Originality/value – Although this study investigates the impact of IPOs on air quality in China, the proposed analytical framework also applies to studies of other financing activities in global markets. This study has important policy implications for government regulations in environmental controls.

The impact of the quality of VC financing and monitoring on the survival of IPO firms

2017 ◽  
Vol 43 (4) ◽  
pp. 440-451 ◽  
Author(s):  
Sophie Pommet
Keyword(s):  
Initial Public Offerings ◽  
Survival Rates ◽  
Venture Capitalist ◽  
Venture Capitalists ◽  
Content Type ◽  
Public Offerings ◽  
Advantages And Disadvantages ◽  
Short Run ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of venture capital (VC) involvement on the survival rate of French initial public offerings (IPOs) during the period 1996-2006. The paper examines the link between the survival rates of IPO companies, and several proxies for the quality of venture capitalist financing and monitoring. Design/methodology/approach To analyze the impact of the involvement of VC on both long and short run post-IPO survival, two methods are used: survival analysis (the Cox proportional hazard), and a logit model. Findings This paper shows that the quality of venture capitalist monitoring, measured by the duration of their investment before the IPO, is positively correlated with company survival rates. However, the author does not find the expected result when the author considers the experience of venture capitalists measured by their age. Research limitations/implications The findings are limited to a sample of VC-backed companies that went public. Practical implications The findings have implications for entrepreneurs. When analyzing the advantages and disadvantages linked to the presence of VC firms in the capital of their companies, entrepreneurs should consider that certain types of venture capitalists might be more or less able to be involved in the monitoring and value adding process. Originality/value To date, there is no comprehensive study on the French IPO market analyzing both long and short run post-IPO survival of VC-backed companies. This paper fills this gap.

Explaining business excellence in Chinese firms: how does institutional relatedness matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Haifeng Yan ◽  
Qihu Wang ◽  
Yi Ke ◽  
Juan Wang
Keyword(s):  
Initial Public Offerings ◽  
Least Square ◽  
Foreign Firms ◽  
Chinese Firms ◽  
Content Type ◽  
Public Offerings ◽  
Positive Effects ◽  
Business Excellence ◽  
Specific Factors ◽  
Ordinary Least Square Regression

Purpose It is widely accepted that business excellence comes from firm-specific factors. However, it is still unclear how institutional relatedness – the degree of embeddedness with the dominant institutions that confer resources and legitimacy, influences the business excellence of the firm. The purpose of this study is to explore the influence of three kinds of institutional relatedness, i.e. home government ties, initial public offerings (IPOs) and alliances with foreign firms, on the business excellence of Chinese firms. Design/methodology/approach This study uses a sample of firms enlisted on the “Most Respected Companies” rank in China during the period 2002–2015 and their paired firms who are absent from the list, by means of ordinary least square regression estimator, to explore the relationship between institutional relatedness and business excellence. Findings The empirical results suggest that IPOs and alliances with foreign firms significantly strengthen firms’ business excellence. Furthermore, home government ties have positive effects on outbound IPOs and alliances with foreign firms but hinder business excellence. Originality/value This study extends the business excellence literature by characterizing institutional rather than firm-specific factors from an institution-based view. It also enriches research on outcomes of institutional relatedness through investigating empirically its impact on business excellence. The findings provide new insights into the dual role of home government ties in achieving business excellence.

IPO initial return in Pakistan: influence of country-level institutional quality

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Waqas Mehmood ◽  
Rasidah Mohd-Rashid ◽  
Abd Halim Ahmad ◽  
Ahmad Hakimi Tajuddin
Keyword(s):  
Stock Exchange ◽  
Significant Risk ◽  
Institutional Quality ◽  
Political Stability ◽  
Least Square ◽  
Cross Sectional ◽  
Content Type ◽  
Country Level ◽  
Initial Return ◽  
The Impact

PurposeThe present study investigated the influence of country-level institutional quality on IPO initial return using World Bank Governance indices.Design/methodology/approachThis study analysed 84 IPOs listed on Pakistan Stock Exchange between 2000 and 2017 using cross-sectional data. The impact of country-level institutional quality on IPO initial returns was examined using ordinary least square, robust least square, stepwise least square and quantile regression.FindingsEmpirically, the values of political stability, government effectiveness and regulatory quality were positively significant, whereas rule of law and control of corruption were negatively significant in explaining the intensity of IPO initial return. The results also show the presence of significant risk in the market. Hence, investors were compensated with higher initial returns for weak country-level institutional quality. The results also reveal that improving country-level institutional quality would improve the financial market transparency, thereby reducing IPO initial returns.Originality/valueNo studies have been conducted regarding the influence of country-level institutional quality on IPO initial return in Pakistan. This study is a pioneering study that seeks to give insights into the link between these variables in the context of Pakistan.

The impact and implications of SWFs: a systematic review of literature

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Roshni Garg ◽  
Abha Shukla
Keyword(s):  
Initial Public Offerings ◽  
Future Research ◽  
Sovereign Wealth Funds ◽  
Content Type ◽  
Public Offerings ◽  
Target Firms ◽  
Governance Practices ◽  
Internationalization Strategies ◽  
Future Research Directions ◽  
The Impact

Purpose This paper aims to systematically review all available evidence on the implications of sovereign wealth funds (SWFs) for various stakeholders (recipients of sovereign investment, home countries, which incorporate SWFs and the world at large) and offer future research directions. Design/methodology/approach A systematic literature review (SLR) technique is used to review 102 handpicked articles for the period 2005‐2019. Findings This review reveals that the literature on the impact of SWFs emerged only during the financial crisis of 2008–2011 and much of it is qualitative in nature. The literature is lopsidedly focused on the impact of SWFs on target firms and there has been a limited empirical investigation of the impact on other stakeholders. There is a lack of consensus in several areas, which calls for additional research. Few areas, which have not been addressed in the literature and can be taken up by future researchers include the impact of SWFs on macroeconomic fundamentals and stock markets of recipient countries, especially emerging economies; implications of SWFs for alternative asset classes; impact on the welfare of citizens and internationalization strategies of home countries; impact on initial public offerings and unlisted corporations; and impact on innovativeness, efficiency and corporate governance practices of target firms. Originality/value To the best of the authors’ knowledge, this is the first paper to use the SLR technique to review the literature on SWFs. It considers the impact of SWFs on all stakeholders and covers both qualitative and quantitative literature published over a long period of 2005‐2019. It also systematizes all available evidence on this theme and identifies important research gaps, which may be helpful for academicians, practitioners and policymakers.

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