The Valuation of Biotech IPOs

2005 ◽  
Vol 20 (4) ◽  
pp. 423-459 ◽  
Author(s):  
Re-Jin Guo ◽  
Baruch Lev ◽  
Nan Zhou
Keyword(s):  
Initial Public Offerings ◽  
Cash Flows ◽  
Value Drivers ◽  
Specific Product ◽  
Public Offerings ◽  
Long Term Performance ◽  
Term Performance ◽  
Relative Valuation

The valuation of initial public offerings (IPOs) is of considerable interest, given the important role these enterprises play in economic growth and investors' decisions. IPO valuation is particularly challenging due to the meager information available about new enterprises at offering dates. We extend the research on IPO valuation in various directions. First, we penetrate deep beyond the traditional proxies for value drivers, such as R&D expenditures and cash flows, by defining and testing a host of specific product-related and competitive environment value drivers; second, we examine IPO valuations at three distinct phases of the going-public process; third, we employ both the direct valuation and relative valuation approaches; and fourth, we round up the analysis by examining the long-term performance of IPOs. Based on a sample of biotech IPOs from the 1990s, we document the overwhelming importance of product-related and intellectual property fundamentals, as well as the irrelevance of several key signals, such as venture capital backing and the quality of underwriters, which played prominent roles in previous research.

scholarly journals Introduction

2018 ◽  
pp. xiv-24
Author(s):  
Douglas Cumming ◽  
Sofia Johan
Keyword(s):  
Initial Public Offerings ◽  
Service Providers ◽  
Investment Banks ◽  
Public Offerings ◽  
Reverse Mergers ◽  
Short And Long Term ◽  
Long Term Performance ◽  
Term Performance ◽  
Special Purpose Acquisition Companies

The worldwide landscape for raising firm capital from Initial Public Offerings (IPOs) has significantly evolved over the last few decades. This introductory chapter reviews more recent research on initial public offerings. The Oxford Handbook of IPOs comprises twenty-nine chapters from authors around the world. The chapters describe the economics of going public, short- and long-term performance of IPOs, regulation of IPOs, IPOs versus acquisitions, reverse mergers, special purpose acquisition companies, service providers including investment banks and auditors, venture capital funds, international differences in IPOs, and crowdfunding. The Introduction summarizes the chapters that appear in the Handbook and highlight research trends on topic.

scholarly journals INVESTIGATION TOWARDS THE LONG-RUN PERFORMANCE OF INITIAL PUBLIC OFFERINGS: EVIDENCE FROM INDONESIAN CAPITAL MARKET

2010 ◽  
Vol 2 (2) ◽  
pp. 100-125
Author(s):  
Lioniva Emasari ◽  
Dewi Tamara
Keyword(s):  
Initial Public Offerings ◽  
Abnormal Return ◽  
Mining Industry ◽  
Cumulative Abnormal Return ◽  
Public Offerings ◽  
Basic Industry ◽  
Long Run ◽  
Long Term Performance ◽  
Term Performance

We study the long-term performance of IPO share issued in Indonesia during the 1996-2001 periods. The IPOs in this period are mostly concentrated in Finance, Trade, Property and Basic Industry & Chemicals. The cumulative abnormal return (CAR) and buy-and-hold abnormal return (BHAR) in the third year are 15.83% and negative 68.02%, respectively. The CAR and BHAR in the fifth year are negative 1% and negative 139.7%, respectively. The highest CAR for 3 and 5 years are mining industry, with 289.29% and 226.80%, respectively. The lowest CAR for third year is trade, service & investment industry, with negative 59.36% and fifth year is agriculture with negative 59.72%. The lowest BHAR for third and fifth year is trade, service and investment industry with negative 113.01% and negative 230.99 respectively. The long-run performance using cumulative abnormal return is similar with the market and cannot outperform the market.  

scholarly journals IPOs Performance Analysis: Evidence from Emerging Markets in the Balkans

2016 ◽  
Vol 63 (3) ◽  
pp. 381-389 ◽  
Author(s):  
Goran Karanović ◽  
Bisera Karanović
Keyword(s):  
Emerging Markets ◽  
Initial Public Offerings ◽  
Public Offerings ◽  
The Balkans ◽  
Financial Variables ◽  
Balkan Countries ◽  
Short And Long Term ◽  
Long Term Performance ◽  
Term Performance

Abstract The main purpose of this paper is to investigate the performance of initial public offerings (IPOs) in the emerging markets with particular focus on the markets of Balkan countries. The paper provides analysis of long and short performance of IPOs. In the Balkan emerging markets IPOs are relatively rarely used. Although all observed Balkan countries have gone through processes of transition from planned economies to market economies in the past 25 years, just a few state-owned companies have been privatized by use of IPOs. Due to this specific nature of the companies the analyzed sample of IPOs is comprised of state-owned and non-state-owned companies. The results are interpreted and expounded accordingly, taking into consideration the aforementioned conjunction. The findings indicate that company characteristics, signalling variables and financial variables have influence on the IPOs short and long term performance. The paper provides academia and policymakers with new revelations concerning the IPO processes in Balkan emerging economies’ capital markets.

New Metrics for Corporate Governance

2015 ◽  
Author(s):  
Erik P.M. Vermeulen
Keyword(s):  
Corporate Governance ◽  
Initial Public Offerings ◽  
Hedge Funds ◽  
High Tech ◽  
Growth Stages ◽  
Public Offerings ◽  
Public Market ◽  
Long Term Performance ◽  
Term Performance

This chapter examines initial public offerings (IPOs) as funding rounds for high-tech companies and exit mechanisms for investors, as well as the stringent corporate governance requirements that apply to newly listed companies in the growth stages of their development. Current investment trends seem to indicate that the IPO market is aging: More and more high-tech companies decide to remain private longer. Moreover, public market investors, such as hedge funds and mutual funds, increasingly invest in non-listed high-tech companies, making “IPO-like” investment rounds at massive valuations a normal phenomenon in the private market. These developments have led to the belief that we are in the next tech bubble. Fortunately, however, a new “establishment” amongst investors is emerging. They realize that in order to prevent the bursting of the bubble, they must collaborate with management and actively contribute to a company’s medium-term and long-term performance.

An Examination of Board Stability and the Long-Term Performance of Initial Public Offerings

2002 ◽  
Vol 31 (3) ◽  
pp. 63 ◽  
Author(s):  
Claire E. Crutchley ◽  
Jacqueline L. Garner ◽  
Beverly B. Marshall
Keyword(s):  
Initial Public Offerings ◽  
Public Offerings ◽  
Long Term Performance ◽  
Term Performance
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