The Underpricing of Initial Public Offerings at the Berlin Stock Exchange, 1870–96

2011 ◽  
Vol 12 (1) ◽  
pp. 11-32 ◽  
Author(s):  
Carsten Burhop
Keyword(s):  
Asymmetric Information ◽  
Initial Public Offerings ◽  
Cash Flow ◽  
Capital Market ◽  
Stock Exchange ◽  
Market Price ◽  
Relevant Information ◽  
Litigation Risk ◽  
Public Offerings

Abstract In this article, we evaluate underpricing of initial public offerings at the Berlin Stock Exchange between 1870 and 1896. In contrast to modern data, first-day returns were extraordinary low and averaged less than 5%, even during the speculative period of the early 1870s. Moreover, standard underpricing theories based on asymmetric information, signalling mechanisms or litigation risk cannot explain underpricing. In contrast to modern markets, underpricing was higher during hot issue markets. Finally, we show that cash-flow relevant information contained in the corporate charter was readily factored in the first market price. Thus, the historical capital market differed from today’s market, but seems to have been efficient.

scholarly journals Do Discounts Enhance or Degrade IPOs Valuation Performance?

2021 ◽  
Vol 5 (2) ◽  
pp. 34-41
Author(s):  
Douaa Tizniti ◽  
Mohammed Rachid Aasri
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Market Price ◽  
Relevant Information ◽  
Fair Value ◽  
Fundamental Analysis ◽  
Public Offerings ◽  
Final Offer ◽  
Before And After ◽  
The Impact

In the present study, we investigate the impact of discounts on the valuation performance of initial public offerings. Review of existing literature reveals that such valuation performance lacks examination in terms of discounts as most studies focus on valuation methods. Accordingly, we examine the valuation performance of initial public offerings before and after applying discounts. Whereby, underwriters apply a deliberate discount to fair value estimate before setting the final offer price. We assess the valuation performance of initial public offerings through bias and accuracy errors as well as explainability. When valuation errors are low, the valuation performance is deemed superior. Our sample consists of 39 initial public offerings conducted on the Moroccan stock exchange between 2004 and 2018. We use publicly available prospectus to collect necessary data. Our results reveal that discounts applied to fair value estimate when setting the final offer price reduce valuation errors. Consequently, discounts enhance the valuation performance of initial public offerings. In fact, both optimistic and pessimistic final offer price are closer to market price in comparison with optimistic and pessimistic fair value estimate. We conclude that if valuations conducted by underwriters are objective, discounts serve as a qualitative valuation to supplement the quantitative one. This qualitative valuation incorporates relevant information about market circumstances with regard to initial public offerings. This indicates the superior fundamental analysis underwriters are capable of performing. However, if valuations conducted by underwriters are subjective, then underwriters deliberately overestimates fair value estimate to justify applying discounts when setting the final offer price. Nonetheless, our study reveals that discounts are more than proportional to valuation optimism. Consequently, while discounts absorb this valuation optimism, they also set a valuation pessimism. In other words, discounts avoid overpricing initial public offerings, yet they result in underpricing them. Interestingly, we discover that although optimistic fair value estimate and pessimistic final offer price have approximate valuation errors, underwriters are more comfortable underpricing initial public offerings than overpricing them.

scholarly journals An Empirical Analysis for Abnormal Returns from Initial Public Offerings (IPOs): evidence of Iranian oil and chemical industries

2013 ◽  
Vol 3 (1) ◽  
pp. 143 ◽  
Author(s):  
Mahdi Filsaraei ◽  
Alireza Azarberahman ◽  
Jalal Azarberahman
Keyword(s):  
Initial Public Offerings ◽  
Capital Market ◽  
Abnormal Return ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Going Public ◽  
Significance Level ◽  
Public Offerings ◽  
Positive Abnormal Return ◽  
Chemical Companies

Purpose: The core purpose of this paper empirically study of the initial public offerings (IPOs) of companies accepted in oil and chemical industries. The paper attempts to answer the question of is there any abnormal return from IPOs in listed companies in Tehran Stock Exchange (TSE).Design/methodology/approach: This research is an applied research, and its design is empirical, which is done by the method of post-event (past information). For the purpose of the study the t-statistic, regression and variance analyses are applied to examine the hypotheses. We use in the analyses a sample of 29 newly accepted Iranian oil and chemical companies listed on TSE for the period of 2001 to 2012. This paper has studied abnormal return and three abnormal phenomena have been considered in capital market. These phenomena consist: (1) underpricing or overpricing of the firm's stock, (2) lower or higher stock return of the firms and (3) Particular period in market for stock transactions volume.Findings: The results support the hypothesis that there is a positive abnormal return to investing in the newly accepted oil and chemical firms for stockholders. It also shown the firm size is the only factor that can affect the stock abnormal return. With considering significance level, investors have to give attention sequentially to other variables such as stock ownership centralization, going public time and stock offering volume.

scholarly journals Optimisme Investor dan Kinerja Jangka Panjang Saham Pasca Initial Public Offerings yang Listing Di Bursa Efek Indonesia

2020 ◽  
Vol 4 (1) ◽  
pp. 43-54
Author(s):  
Mu’minatus Sholichah
Keyword(s):  
Initial Public Offerings ◽  
Capital Market ◽  
Stock Exchange ◽  
Company Size ◽  
Public Offerings ◽  
Long Period ◽  
Stock Investment ◽  
Long Term Performance ◽  
Term Performance

This study discusses and analyzes from the perspective of investor optimism and long-term performance after the IPO in the Indonesian capital market. Observations will be made regarding the influence of investors on the increase in the length of shares after the IPO with control variables of company size, company age, offer size, the achievement of underwriters, profitability on the Indonesia Stock Exchange. This study uses data from 2004-2017, with 194 IPO companies from 2004-2015 in the Indonesian capital market. Testing is done by using two drunken linear regression. The results of this study indicate that investors in the Indonesian capital market not only consider irrational factors but also consider rational factors about the company's character in making decisions to buy IPO shares. The characteristics of the company include the size of the company and the size of the stock offering. This study provides benefits for IPO stock investors who rely on the benefits of initial stock investment in a relatively long period of time so as not to suffer losses

scholarly journals Laba Bersih, Rasio Hutang Atas Modal, Arus Kas Operasi dan Harga Saham Bank Umum Milik Negara

2021 ◽  
Vol 8 (01) ◽  
pp. 122-135
Author(s):  
Lusy Rahayu
Keyword(s):  
Cash Flow ◽  
Capital Market ◽  
Stock Exchange ◽  
Secondary Data ◽  
Relevant Information ◽  
Positive Influence ◽  
Financial Statement ◽  
Company Performance ◽  
Net Profit ◽  
Equity Ratio

ABSTRACT The capital market is one of investment alternative that able to yield optimal advantage for investor. Each investor is requiring of relevant information with transaction development in stock. Net profit, Debt to Equity Ratio and Cash Flow of Operation was one of most important information on company performance. This research aims to examine : (1) The Influence of Net Profit to Price Stock 4 goverment bank in 2009-2016, (2) The Influence of Debt  to Equity Ratio to Price Stock 4 government bank in 2009-2016, (3) The Influence of Cash Flow of Operation to Price Stock 4 government bank in 2009-2016, (4) The Influence of Net Profit,Debt to Equity Ratio and Cash Flow of operation Together to Price Stock 4 government bank in 2009-2016. Data in this research is secondary data obtained from the companys annual financial statement in the Indonesia Stock Exchange  (IDX). This type of research of causality. This research was conducted by using sample of 4 Government Bank Listed in Indonesia Stock Exchange Periode 2009-2016. The statistic method used are analysis multiple linear regression. This study concluded that Net Profit have a possitive affect on Price stock, Debt to Equity Ratio have a positive influence on price stock, Cash Flow of Operation have a possitive influence on price stock and Net profit, Debt to Equity Ratio, Cash Flow of operation are simultaneosly have a positif influence on price stock 4 Government Bank in 2009-2016. ABSTRAK Pasar modal merupakan salah satu alternatif pilihan investasi yang dapat menghasilkan tingkat keuntungan optimal bagi para investor. Setiap investor sangat membutuhkan informasi yang relevan dengan perkembangan transaksi di bursa. Laba Bersih, Rasio Hutang terhadap Modal dan Arus Kas Operasi merupakan salah satu informasi penting yang dapat digunakan oleh investor untuk menilai kinerja perusahaan. Penelitian ini bertujuan untuk mengetahui: (1) Pengaruh Laba Bersih terhadap Harga Saham 4 Bank BUMN periode 2009-2016, (2) Pengaruh Rasio Hutang Atas Modal terhadap Harga Saham 4 Bank BUMN periode 2009-2016, (3) Pengaruh Arus Kas Operasi terhadap Harga Saham 4 Bank BUMN periode 2009-2016, (4) Pengaruh Laba Bersih,Rasio Hutang Atas Modal dan Arus Kas Operasi secara bersama-sama terhadap Harga Saham 4 Bank BUMN periode 2009-2016. Data-data dalam penelitian ini merupakan data sekunder yang diperoleh dari laporan keuangan tahunan perusahaan yang terdaftar di Bursa Efek Indonesia. Penelitian ini dilakukan  dengan menggunakan sampel berjumlah 4 Bank BUMN yang terdaftar di Bursa Efek Indonesia periode 2009-2016. Metode statistik yang digunakan adalah analisis regresi linier berganda. Hasil penelitian menunjukkan bahwa laba bersih berpengaruh terhadap harga saham,rasio hutang terhadap modal berpengaruh terhadap harga saham,arus kas berpengaruh terhadap harga saham dan laba bersih,rasio hutang atas modal,arus kas secara simultan berpengaruh terhadap harga saham 4 Bank BUMN yang terdaftar di Bursa Efek Indonesia Tahun 2009-2016.

scholarly journals Pengujian Kandungan Informasi Arus Kas Dan Laba Akuntansi Terhadap Return Saham: Studi Pada Perusahaan LQ45

2019 ◽  
Vol 1 (1) ◽  
pp. 51-59
Author(s):  
Samsul Hadi ◽  
Syahril Djaddang ◽  
Suyanto
Keyword(s):  
Stock Returns ◽  
Cash Flow ◽  
Capital Market ◽  
Stock Exchange ◽  
Relevant Information ◽  
Cash Flows ◽  
Market Anomalies ◽  
Accounting Earnings ◽  
Operating Cash Flow ◽  
Using Data

This study aimed to analyze the effect of changes in cash flow from operating activities, cash flows from investing avtivities, cash flow from financing activities and accounting earnings on stock returns in the Indonesian capital market. Research conducted on 15 companies listed in the LQ45 index in the Indonesia Stock Exchange (BEI). Observations were made for 4 years from 2011 to 2014. Data were analyzed using data panel analysis. The results show that operating cash flow and financing cash flow significantly influence stock returns. This means any increase in operating cash flow and in expenditures for financing activities followed by an increase in stock returns. Accounting earnings and cash flows have no significant effect on stock returns, since the accounting information and investment cash flows of the sample companies do not contain relevant information and market anomalies occur due to investor failure to understand accrual information, cash flow, market risk and conservatism.

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.

scholarly journals Pendampingan Pentingnya Strategi dalam Meningkatkan Minat Nasabah terhadap Investasi Saham di Surabaya

2020 ◽  
Vol 2 (2) ◽  
pp. 84-89
Author(s):  
Veronika Nugraheni Sri Lestari ◽  
Dwi Cahyono ◽  
Nila Romatal Azah ◽  
Devy Mei Ariyanti
Keyword(s):  
Capital Market ◽  
Stock Exchange ◽  
Initial Step ◽  
Financial Instruments ◽  
Public Companies ◽  
Public Offerings ◽  
Securities Trading ◽  
Market Infrastructure ◽  
The Capital Market

Capital markets are often interpreted as a market for a long-term financial instrument (securities) (its maturity is more than 1 year). In addition to that understanding, the capital market is also often associated as a place for the transaction of the party that needs funds (the company) and the Excess party (financier). The initial step of Sharia capital market developments in Indonesia began with the issuance of sharia funds on 25 June 1997 followed by the issuance of sharia bonds at the end of 2002, followed by the presence of the Jakarta Islamic Index (JII) in July 2000. The marketable securities traded on the stock exchange include stocks, bonds and mutual funds. Marketable securities are often referred to as ' financial instruments ' or ' securities ' or ' Sekuritas ' (Securities Act No. 8 year 1995 defines the capital market as "the activities concerned with public offerings and securities trading, public companies relating to securities, published, as well as institutions and professions relating to the securities". The capital market acts as a liaison between investors and companies or government institutions through the long-term trading of financial instruments. In an effort to support the realization of the Indonesian capital market to become a resilient and global economic driver of the national economy as stated in the Indonesian capital market blueprint, it needs to be done continuously to improve and expand the capital market infrastructure towards the better direction.

scholarly journals Testing Strong Form Market Efficiency of Jordanian Capital Market: Performance Appraisal of Mutual Funds a comparable study case with Saudi Arabia

2020 ◽  
Vol 16 (2) ◽  
pp. 3-15
Author(s):  
Mazen Bustanji
Keyword(s):  
Saudi Arabia ◽  
Performance Appraisal ◽  
Mutual Funds ◽  
Capital Market ◽  
Stock Exchange ◽  
Market Price ◽  
Strong Form ◽  
Monthly Data ◽  
Amman Stock Exchange ◽  
Modelling Techniques

This paper analyses the strong-form efficiency of the capital market in Jordan by evaluating the performance of mutual funds over the period from 2011 to 2016, and compare it with the situation in Saudi Arabia using the Jensen modelling techniques. These tests were applied on monthly data. Results from the study show that there is no evidence of the strong-form of efficiency in either the Amman Stock Exchange or in the Saudi Arabia capital market. Therefore, investors in the Amman Stock Exchange and Saudi Arabia capital market cannot predict stocks prices or returns in the short term; with regard to firms, it suggests that the securities of firms cannot outperform the market and present market price is to a certain extent a true reflection of the present situation of their securities, in addition there is lack number availability of the mutual funds in Jordan.

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