Groupon: let's make a deal?

2015 ◽  
Vol 11 (1) ◽  
pp. 26-38
Author(s):  
Susan White
Keyword(s):  
Social Media ◽  
Initial Public Offering ◽  
Content Type ◽  
Media Companies ◽  
Secondary Sources ◽  
Long Run ◽  
Public Offering ◽  
Media Firms ◽  
Term Performance

Synopsis Groupon, an online coupon company, was one of many companies that considered an initial public offering (IPO) during what might be a second technology/internet/social media IPO boom in 2011. Some companies chose to postpone their IPOs, while others took advantage of the media attention focussed on technology companies, and in particular, social media firms. Should investors hop on the tech IPO bandwagon, or hold off to better evaluate the long-term prospects of tech companies, and in particular social media companies? Would the valuation of Groupon justify an investment in IPO shares? Research methodology The case was researched from secondary sources, using Groupon's IPO filing information, news articles about the IPO and industry research sources, such as IBIS World. Relevant courses and levels This case is appropriate for an advanced undergraduate or MBA corporate finance or investment elective. Most introductory finance classes do not have the time to cover later chapters in a finance textbook, where information about IPOs is generally found. It could also be used at the end of a core finance course, where the instructor wanted to introduce this topic through a case study of a hard-to-value internet-based company to illustrate the difficulties in setting IPO prices. The case could also be used in an equity analysis class, an entrepreneurial finance class or an investment class, to spur discussion about valuing an internet company and choosing appropriate investments for pension fund investing. This case could also be used in a strategy class, focussing on the five forces question, and eliminating the valuation question. Theoretical basis There is a great deal of literature about IPOs and their long-term performance. An excellent source is Jay R. Ritter's research, http://bear.warrington.ufl.edu/ritter, which has a longer time period and more data than could be contained in this case. IPO puzzles include persistent undervaluing of IPOs; in other words, the offer price is lower than, and sometimes substantially lower than, the first day close price. A second issue is the generally poorer long-run performance of companies after their IPO when compared to similar firms that did not do an IPO.

The reshaping of Chinese consumer values in the social media era

2015 ◽  
Vol 18 (4) ◽  
pp. 409-426 ◽  
Author(s):  
Jingyi Duan ◽  
Nikhilesh Dholakia
Keyword(s):  
Social Media ◽  
Initial Public Offering ◽  
Critical Role ◽  
Chinese Society ◽  
Content Type ◽  
Media Companies ◽  
Consumer Values ◽  
Chinese Consumer ◽  
Public Offering ◽  
Chinese Social Media

Purpose – The purpose of this paper is to investigate how, in China, postings on social media site Weibo reflect as well as accelerate the reshaping of traditional values. As Chinese social media extend their reach outside China, the displays of visible desire, hedonism and materialism could influence global consumption ethos. Design/methodology/approach – Using interpretive content analysis, over 250 Weibo postings of 8 selected Weibo users, from the network of one of the authors, were identified, coded and interpreted. The users were selected based on their frequency, variety and expressiveness of postings. Findings – Weibo is playing a critical role in transforming Chinese consumer values. Via Weibo, personal consumption experiences are available for public gaze. Consequently, desire for powerfully signified objects and experiences is more visible; “enjoy now” is turning out to be an appreciated life attitude, and materialism and hedonism are growing irresistibly. As a result, the traditional Chinese consumer values – suppressing desire, delaying gratification and thriftiness – are losing ground in Chinese society. Also, as Weibo makes the influence of the elite as well as electronic word-of-mouth very powerful, the values of the elite and grassroots groups are actually converging instead of being separated by substantial chasms that have existed historically. Practical implications – Sina Weibo had a US initial public offering (IPO) of its stock in April, 2014, and many other China-based Internet firms were getting set for US IPOs. This paper provides unique insights for Chinese social media companies’ potential global impact. Future social media contexts would be shaped by collision as well as convergence of Asia-centric and USA-centric platforms. This paper lays the groundwork for studying such interactions. Originality/value – In-depth interpretations of Weibo postings contribute to our understanding of how social media impact Chinese society now and would potentially affect global societies later. This is a pioneering study on the massive influences of social media on the macro-level consumer behavior.

IPO underpricing and long-term performance in China: the perspective of price limit policy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yuxin Wang ◽  
Guanying Wang
Keyword(s):  
Initial Public Offering ◽  
Stock Exchange ◽  
Ipo Underpricing ◽  
Content Type ◽  
Price Limit ◽  
Good Policy ◽  
Public Offering ◽  
Long Term Performance ◽  
Term Performance

PurposeThe purpose of this paper is to explore how the price limit policy implemented in 2014 affects initial public offering (IPO) underpricing and long-term performance in China.Design/methodology/approachThe data are the IPOs from Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) between 2004 and 2018. The data are firstly divided into the IPOs before the price limit policy and the IPOs after the price limit policy according to the time of issuance. Then the two groups are divided into 4 subsamples according to the market blocks and the P/E ratio. The authors use multiple regression models to explore the effect of price limit policy in each subsample.FindingsThe first-day price limit system for IPOs is similar to the upward fuse mechanism, the purpose of which is to suppress IPO underpricing. However, this study finds that the policy does not suppress IPO underpricing, but increases the underpricing rate in all subsamples. Besides, the long-term performance in each subsample is different from each other. Main Board stocks’ long-term performance is worse after the policy. The policy makes Small and Medium Enterprise Board (SME Board) and Growth Enterprise Market Board (GEM Board) stocks with high P/E ratios perform better in the long term. For SME Board and GEM Board stocks with low P/E ratios, the policy makes no significant effect.Practical implicationsGood policy intentions may sometimes lead to counterproductive effects. However, since the long-term performance of each subsample is different, it is difficult to judge whether the policy should continue to be implemented or cancelled. Implementing different policies for different subsamples may be a better way to solve this problem.Originality/valueThis paper contributes to the study of IPO underpricing and long-term performance from the perspective of price limit policy.

scholarly journals The long-run performance of US firms pursuing IPOs in foreign markets

2018 ◽  
Vol 17 (1) ◽  
pp. 58-77 ◽  
Author(s):  
Robert Killins ◽  
Peter V. Egly
Keyword(s):  
Capital Markets ◽  
Abnormal Returns ◽  
Listed Companies ◽  
Foreign Markets ◽  
Content Type ◽  
Long Run ◽  
The Us ◽  
Long Term Performance ◽  
Term Performance

Purpose The purpose of this paper is to investigate the long-run performance of a unique set of US domiciled firms that have bypassed the US capital markets in pursuit of their initial public offering (IPO) overseas. Additionally, this paper then tests the popular underwriter prestige impact and the window of opportunity hypothesis on this unique subset of IPOs. Design/methodology/approach Using a sample of foreign and purely domestic IPOs made by US firms from 2000 to 2011, this study investigates the long-term performance, one-, two- and three-year by using two measures (buy-and-hold return and cumulative abnormal returns) to test the long-run returns of newly listed companies. Finally, the research incorporates both the traditional matching methodology (issue year and size) along with propensity score matching methodology. Findings FIPOs of US companies underperform DIPOs and their matched DIPOs; furthermore, FIPOs underperform the index of the two listing countries they use the most (UK and Canada). Although the choice of a reputable underwriter mitigates underperformance, the choice of listing in a foreign country only may be a result of possible high valuations accorded by foreign investors who buy US-listed companies on the domestic exchange possibly for reducing exchange rate risk and gaining US diversification without incurring additional costs. It is, thus, possible that US companies that undertake Foreign IPOs not only escape potentially higher Security and Exchange Commission regulations and disclosure but also benefit from higher valuations in the foreign markets. Originality/value To the best of the authors’ knowledge, this is the first study to investigate the long-term performance of US firms bypassing the US capital markets in pursuit of their initial equity offering elsewhere. Caglio et al. (2016) investigated why firms decide to pursue such equity raising activity but fail to investigate the firms’ actual performance after issuing equity. This research fills such a gap in the literature and is important for both academics and practitioners. Practitioners can use this information in assessing the quality of such investments in the long-run, and firms can use such information when determining the different options of issuing equity. Further, regulators should be aware of the implications that increased regulations have on capital raising activities in their domestic market.

Big tech's anti-Trump activism to have limited impact

2021 ◽  
Keyword(s):  
Social Media ◽  
Hate Speech ◽  
Public Speech ◽  
Content Type ◽  
White House ◽  
Media Companies ◽  
Capitol Hill ◽  
Democratic Control ◽  
Media Firms

Significance Facebook has indefinitely suspended Trump from its main platform and Instagram, while Twitter has done so permanently for his role in instigating violence at US Capitol Hill on January 6. These developments spotlight the role of social media firms in spreading and tackling hate speech and disinformation, and their power unilaterally to shut down public speech. Impacts Democratic control of the White House and Congress offers social media companies a two-year window to ensure softer regulation. The EU will push its new digital markets legislation with vigour following the events at US Capitol Hill. Hard-right social media will find new firms willing to host their servers, partly because their user numbers run to millions not billions.

KINERJA SURAT BERHARGA SETELAH INITIAL PUBLIC OFFERING

2005 ◽  
Vol 1 (2) ◽  
pp. 135
Author(s):  
Umi Murtini
Keyword(s):  
Initial Public Offering ◽  
Abnormal Return ◽  
Stock Exchange ◽  
T Test ◽  
Short Term ◽  
Sample Data ◽  
Level I ◽  
Public Offering ◽  
Term Performance

This study observes the pedormance of stock, shortierm and long-term in Jakarta Stock Exchange (BEJ). Sample data taken from firm that hove done IPO since the January 1990 untit December 2003, amount sample that used as much 255 firms. The daily abnormal return used as proxy perlormance by using Market-Adjusted Return Abnormal Model (Aggwwal $993). Short-term pedormance is based on a share performance atter, one day,' one month, 2 month and 3 month, Long-term perfonnance is b,osed on performance during 24 month. The result tests of one sampte t-test indicate that in short-term, cnerage abnormal return ore positive equal to i,8, 83 %. This result consistent with the previous research that performance in short-term experience, of the under pricing, Abnormal relurn that resuked in long term are arcrage negative equal to 21, 44%. This study Jinds the consistent phenomenon underperformance on a long term. And then the results of paired comparisont-test indicate that the short-term performance,is better lhqnlong-range performance, at level I %o.signtficance.Keywords: t Initiol Pubtic Offering, Performace of IPO, Abnormitl'Return, Underpricing and Underperform)

Earnings Management and IPO Anomalies—Evidence from Indian Stock Market

2021 ◽  
pp. 227853372199471
Author(s):  
Aprajita Pandey ◽  
J. K. Pattanayak
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Initial Public Offering ◽  
Public Offering ◽  
High Level ◽  
Long Term Performance ◽  
Indian Stock Market ◽  
Term Performance ◽  
The Relationship

This study examines the relationship between the extent of earnings management in a firm, the level of underpricing during an initial public offering (IPO), and their long-term performance. Earnings management has been acknowledged as a matter of concern during IPOs since long; however, its relationship with underpricing and long-term returns remained inconclusive in emerging markets like India. Using a sample of Indian IPO firms, this study finds that firms that manage accruals aggressively in the pre-IPO period have high initial returns and subsequently low stock returns in the post-IPO period. This study also observed that firms that have used abnormal accruals more conservatively while reporting earnings have better returns in the third year after IPO compared to the firms that reported more aggressively. The results are in consonance with the theory of information asymmetry and suggest that valuation of an IPO firm becomes ambiguous with high level of earnings management, which leads to higher underpricing.

Does franchising matter on IPO performance?

2017 ◽  
Vol 29 (10) ◽  
pp. 2535-2555 ◽  
Author(s):  
Ozgur Ozdemir ◽  
Murat Kizildag
Keyword(s):  
Initial Public Offering ◽  
Abnormal Returns ◽  
Restaurant Industry ◽  
Least Square ◽  
Content Type ◽  
Ipo Performance ◽  
Long Run ◽  
Ordinary Least Square Regression ◽  
Using Data ◽  
Public Offering

Purpose This paper has two main purposes. First, this paper aims to examine whether pre-initial public offering (IPO) franchising activity of issuing firms is priced in the financial markets and results in pricing differential between franchising and non-franchising firms at the time of IPO. Second, the paper aims to find out whether firms with pre-IPO franchising achieve better post-IPO stock performance compared to non-franchising firms. Design/methodology/approach To test research hypotheses, empirical models were developed and tested through ordinary least square regression analysis. Several data sources were used including Thomson One Banker’s SDC database, Compustat/CRSP and IPO prospectuses. Findings The paper provides further insights to the underpricing phenomenon surrounding IPOs and long-run performance of IPO shares subsequent to listing. Particularly, the study reveals that franchising firms underprice their issues to a higher degree compared to non-franchising firms, and franchising positively affects the post-IPO benchmark adjusted cumulative abnormal returns (CARs) over a three-year observation period. Research limitations/implications Because the study tests the proposed hypotheses using data only from the restaurant industry, the research results may lack generalizability. Therefore, researchers are encouraged to test similar hypotheses using larger sample sizes from other industries. Practical implications The study’s findings have important implications both for IPO issuers in positioning their offering and for IPO investors in comparing IPO stocks and forming long-run portfolios. Originality/value This paper contributes both to the IPO and franchising literatures by providing primary insights about how investors perceive pre-IPO franchising and incorporate their perception into their pricing at an IPO.

Do anchor investors affect long run performance? Evidence from Indian IPO markets

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abhishek Kumar ◽  
Seshadev Sahoo
Keyword(s):  
Initial Public Offering ◽  
Abnormal Returns ◽  
Indian Market ◽  
Firm Level ◽  
Content Type ◽  
Ipo Performance ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
Size Grade ◽  
Public Offering

Purpose Anchor investor (AI) regulation was introduced in 2009 by the Indian market regulator Securities and Exchange Board of India to facilitate the price discovery process during the book-building mechanism. This study aims to examine the aftermarket pricing performance of initial public offering (IPO) firms over the long-run period of up to 36 months after the listing date in the anchor investor regime. Design/methodology/approach The post-issue performance of 129 Indian IPOs issued from 2009 to 2014 is studied by using buy and hold abnormal returns, cumulative abnormal returns and wealth relatives approaches. This study presents the aftermarket performance indicators of Indian IPOs along with the comparative analysis between anchor-backed and non-anchor-backed IPO categories. Using multiple regression analysis, this study identifies the firm-level variables and issue characteristics that can explain long-term IPO performance. Findings This study reports that Indian IPOs continue to underperform in the long run in the anchor regulation era as well. However, anchor-backed IPOs are reported to underperform lesser than the IPOs not backed by anchor investment. Additionally, this study documents that the variables, i.e. offer size, grade, post-issue promoter holding and IPOs issued during hot IPO periods, are significant in explaining the 36-month aftermarket performance. Originality/value This study investigates the long-run aftermarket pricing performance of anchor affiliated IPOs in the Indian market context. Thus, it contributes to the limited primary markets’ research from emerging economies. Further, the results provide fresh evidence reaffirming the credibility of AI as an institutional investor for attestation of quality of the issues.

scholarly journals Earnings Quality and Ownership Structure: The Role of Private Equity Sponsors

2009 ◽  
Vol 84 (3) ◽  
pp. 623-658 ◽  
Author(s):  
Sharon P. Katz
Keyword(s):  
Initial Public Offering ◽  
Stock Price ◽  
Private Equity ◽  
Earnings Quality ◽  
Price Performance ◽  
Before And After ◽  
Public Offering ◽  
Long Term Performance ◽  
Term Performance

ABSTRACT: This study explores how firms' ownership structures affect their earnings quality and long-term performance. Focusing on a unique sample of private firms for which there is financial data available in the years before and after their initial public offering (IPO), I differentiate between those that have private equity sponsorship (PE-backed firms) and those that do not (non-PE-backed firms). The findings indicate that PE-backed firms generally have higher earnings quality than those that do not have PE sponsorship, engage less in earnings management, and report more conservatively both before and after the IPO. Further, PE-backed firms that are majority-owned by PE sponsors exhibit superior long-term stock price performance after they go public. These results stem from the professional ownership, tighter monitoring, and reputational considerations exhibited by PE sponsors.

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