Information and performance optimization: a study of Indian IPOs during 2005-2012

2017 ◽  
Vol 51 (4) ◽  
pp. 458-471 ◽  
Author(s):  
Sheena Chhabra ◽  
Ravi Kiran ◽  
A.N. Sah ◽  
Vikas Sharma
Keyword(s):  
Initial Public Offerings ◽  
Performance Optimization ◽  
Investment Decision ◽  
Mixed Integer ◽  
Expected Return ◽  
Content Type ◽  
Public Offerings ◽  
The Mean ◽  
And Performance ◽  
Global Investors

Purpose The purpose of this paper is to focus on examining the first day returns of initial public offerings (IPOs) and the role of information on their performance. The study tries to optimize the returns of the new issues during 2005-2012 with risk as a constraint. Design/methodology/approach The initial returns are measured through the market-adjusted excess return and the risk associated with the new issue is measured through underwriters’ reputation. The returns have been optimized through a mixed integer linear problem using the Maple software. Findings The previous studies show that various informational variables affect the listing day returns significantly. The results of the present study indicate that the mean of initial returns for IPOs during 2005-2012 is 18.03 and the mean risk for these issues is 0.46. The findings also suggest that the optimal returns are obtained in the pre-recession era (2005-2008) and the value for the same is 50.02 percent. Originality/value The current study contributes in the investment decisions for global investors as every investor wants to maximize his/her returns. The optimal returns with risk as a constraint will help the investors in improving their investment decision as a prudent investor does not aim solely at maximizing the expected return of an investment but is also interested in optimizing with the minimization of risk.

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.

scholarly journals Disclosure of Risk Factors on Prospectus and Initial Public Offerings (IPO) Performance: Evidence from Indonesia

2020 ◽  
Vol 15 (1) ◽  
pp. 15
Author(s):  
Randy Kuswanto
Keyword(s):  
Initial Public Offerings ◽  
Negative Impact ◽  
Stock Exchange ◽  
Investment Decision ◽  
Ordinary Least Squares ◽  
Risk Information ◽  
Risk Disclosure ◽  
Public Offerings ◽  
Qualitative And Quantitative ◽  
Investment Decision Making

The purpose of this study is to investigate how risk information disclosed in prospectus influences the initial returns of initial public offerings (IPOs) in Indonesia. This study collected 62 sample IPOs offered in the Indonesian Stock Exchange from 2017–2018. Ordinary least squares was performed to test the association between risk disclosure and initial returns. Results indicate that prospectus provides risk information associated with initial returns. Both qualitative and quantitative dimensions have a significant negative impact on the initial returns. It can be concluded that risk information has an important role in the underpricing phenomenon. The study has extended the available literature by investigating risk disclosure from a dual perspective. Moreover, qualitative and quantitative assessments both have a direct impact on the initial returns and must be considered in investment decision making. Keywords: Risk, IPO, underpricing, initial returns

The control-ownership wedge and the survival of French IPOs

2018 ◽  
Vol 19 (2) ◽  
pp. 271-294 ◽  
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.

The Relationship between Boards of Directors and Initial Public Offerings in the Biotechnology Industry

1998 ◽  
Vol 22 (3) ◽  
pp. 5-29 ◽  
Author(s):  
Todd A. Finkle
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Biotechnology Industry ◽  
Public Offerings ◽  
Biotechnology Firms ◽  
The Board Of Directors ◽  
And Performance ◽  
Public Offering ◽  
Performance Results

Utilizing the entire population of public biotechnology firms from 1980-1994, three models were tested to determine If a relationship exists between the size and composition of the board of directors and performance. Results indicate significant positive relationships between director expertise and the size of a firm's initial public offering. Going public during hot markets and larger firms were also related to larger Initial public offerings. These findings will benefit practitioners in the formation of boards within the biotechnology Industry. Managers of firms within the biotechnology industry who are contemplating a public offering will be able to proactively address the composition of their boards.

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.

Impact of disclosure of risk factors on the initial returns of initial public offerings (IPOs)

2018 ◽  
Vol 31 (1) ◽  
pp. 46-62 ◽  
Author(s):  
Shaista Wasiuzzaman ◽  
Fook Lye Kevin Yong ◽  
Sheela Devi D. Sundarasen ◽  
Noor Shahaliza Othman
Keyword(s):  
Risk Factors ◽  
Initial Public Offerings ◽  
Ordinary Least Squares ◽  
Investment Risk ◽  
Least Squares Regression ◽  
Risk Disclosure ◽  
Content Type ◽  
Public Offerings ◽  
The Individual ◽  
Overall Risk

Purpose When a firm goes public for the first time, its prospectus serves as an important reference for investors. It is required by regulation that the risk factors which have significant influence on the business be disclosed in the prospectus. The purpose of this study is to analyze how disclosure of these risk factors influences the initial returns of initial public offerings (IPOs). Design/methodology/approach To do this, a sample of 96 Malaysian new equity offerings (IPOs) from year 2009 to year 2013 is used. Ordinary least squares regression technique is used to regress initial returns against risk disclosures. Aside from overall risk disclosure, individual dimensions of risk (internal risk, external risk and investment risk) are also considered. Findings Results of the regression analyses reveal a direct relationship between the IPO initial returns and the disclosure of risk. Overall risk disclosure is found to be highly significant in influencing initial returns. However, further investigation into the individual group of risks shows that only investment risk is highly significant in influencing IPO initial returns. Originality/value The results found in this study are interesting as, unlike prior studies, it is shown that disclosures of internal and external risks are not significant in influencing investors’ actions possibly because of their generalizability, whereas disclosures related to investment risks are significant. Equity of firms which disclose more of its risk factors can be expected to generate higher initial returns.

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.

Global M&A activity seen holding up in 2016

2016 ◽  
Keyword(s):  
Initial Public Offerings ◽  
The United States ◽  
Investment Banks ◽  
Content Type ◽  
Public Offerings ◽  
The Third ◽  
Systemic Risks ◽  
European Banks ◽  
Strong Performance ◽  
First Time

Subject Trends in global M&A activity. Significance The global sell-off of banking stocks today underlines the importance to investment banks' earnings of merger and acquisition (M&A) activity staying buoyant. Global M&A activity increased in 2015 for the third straight year, topping 5.0 trillion dollars for the first time, according to Dealogic. This is up 37% from 3.7 trillion dollars in 2014 and bests the record set in 2007. M&A fees boosted US banks' earnings, partly offsetting trading losses in volatile markets and the slowdown in initial public offerings (IPO). Results for European banks lagged. Impacts Shareholders will want strong performance, putting pressure on banks to create deals, especially in bearish global equities markets. Bank stocks will underperform, due to market concerns over fundamentals and lurking systemic risks. The United States is likely to retain its ranking as top M&A region in 2016.

A bibliometric analysis of managerial finance: a retrospective

2020 ◽  
Vol 46 (11) ◽  
pp. 1495-1517
Author(s):  
H. Kent Baker ◽  
Satish Kumar ◽  
Nitesh Pandey
Keyword(s):  
Bibliometric Analysis ◽  
Initial Public Offerings ◽  
Temporal Analysis ◽  
The United States ◽  
Bibliographic Coupling ◽  
Content Type ◽  
Public Offerings ◽  
The United Kingdom ◽  
Financial Decision ◽  
Number Of Citations

PurposeManagerial finance (MF) started publication in 1975 and celebrated its 45th anniversary in 2019. The purpose of this study is to provide a bibliometric analysis of MF between 1996 and 2019.Design/methodology/approachThis study uses the Scopus database to analyze the most frequent authors in MF along with their affiliated institutions and countries. It also identifies the most often cited MF articles. This study uses bibliometric indicators to analyze productivity and stature of MF. It also uses such tools as bibliographic coupling, keyword analysis and coauthorship analysis to analyze MF. Further, the study provides a temporal analysis of MF publishing across different ownership periods.FindingsMF publishes between 60 and 70 articles each year and its number of citations steadily grows. Although contributors to the journal come from around the globe, they most often are affiliated with the United States, the United Kingdom and Greece. Temporal analysis of journal's themes reveals that it has expanded its scope from accounting research to a much wider array of finance topics. Bibliographic coupling network analysis shows that major themes published in MF involve stock markets, corporate governance, banking, financial decision-making and initial public offerings.Research limitations/implicationsDue to the unavailability of bibliometric data, the analysis excludes an analysis of MF between 1975 and 1995.Originality/valueThis study provides the first overview of the MF's publication and citation trends as well as its thematic structure. It also suggests future directions that the journal might take.

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