scholarly journals Initial Public Offerings: The Case Of Health Maintenance Organizations (HMOs)

2011 ◽  
Vol 1 (6) ◽  
Author(s):  
Martha Strange ◽  
John R. Ezzell ◽  
Aref N. Dajani
Keyword(s):  
Initial Public Offerings ◽  
Stock Prices ◽  
Composite Index ◽  
Abnormal Returns ◽  
The United States ◽  
Health Maintenance Organizations ◽  
Accounting Data ◽  
Health Maintenance ◽  
Public Offerings ◽  
Long Run

Objective: To determine whether the returns of initial public offerings (IPOs) of HMOs in the days following issue are similar to the return behavior of IPOs in previous studies.Data Source: The Center for Research in Security Prices (CRSP) tapes compiled by the Graduate School of Business at the University of Chicago provides daily stock prices, holding period returns, and other data pertinent to research in traded securities.Study Design: The hypothesis to be tested is whether the mean excess return surrounding the offer date is equal to zero. To adjust the initial returns of the IPOs for overall market movements, Standard & Poors Composite Index (S&P 500) was selected as the proxy for the market in general. We compute the long-run performance for the HMOs and compare that return to the S&P 500 and the CRSP AMEX/NYSE equally-weighted and value-weighted indices.Data Collection/Extraction Method: We matched for-profit HMOs listed in the National Directory of Managed & Integrated Care Organizations to the commitment offerings reported by Securities Data Corporation to the same firms on the daily CRSP tapes. This left 49 firms that went public between 1971 through 1997. The Wharton Research and Data Services External (WRDSX) was used for data extraction and SAS was used for statistical analysis.Principal Findings: IPOs of HMOs are underpriced and demonstrate abnormal returns. The average initial return on these IPOs is less than that of the average in the United States. On a long-run performance basis, they performed better than the broad market indices.Conclusions: Returns follow a similar pattern as do IPOs in general except for the long-run performance. This needs further research as well as a comparison of performance before and after going public in cases where accounting data is available.

scholarly journals The Aftermarket Performance of Initial Public Offerings in Pakistan

2016 ◽  
Vol 21 (1) ◽  
pp. 23-68
Author(s):  
Muhammad Zubair Mumtaz ◽  
Zachary A. Smith ◽  
Ather Maqsood Ahmed
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Activity Period ◽  
Risk Level ◽  
Public Offerings ◽  
Explanatory Variables ◽  
Market Sentiment ◽  
Long Run

This paper estimates the aftermarket performance of initial public offerings (IPOs) listed on the Karachi Stock Exchange. The evidence confirms that IPOs generate statistically significant abnormal returns in the short run, which indicates that underwriters initially underprice IPOs when analyzed using a short time horizon. However, when using longer time horizons to estimate abnormal performance, the results indicate that IPOs underperform in the long-run. There is an apparent dislocation between the initial valuation set by underwriters and the premium paid by the market for these new issues. The market sentiment that causes this temporary disequilibrium eventually fades and the market reprices the newly issued shares. We conduct an extreme bounds analysis to test the sensitivity and robustness of 16 explanatory variables in determining the long-term performance of unseasoned newly issued shares. The results indicate that the long-term investment ratio, industry affiliation, market-adjusted abnormal returns, financial leverage, return on assets, IPO activity period, the aftermarket risk level of unseasoned issues, and the post-issue promoter’s holdings variables significantly affect IPOs’ aftermarket performance. Theoretically, the overreaction hypothesis, ex-ante uncertainty hypothesis and window-of-opportunity hypothesis best explain IPOs’ aftermarket performance in this study.

Performance of IPOs of Indian Companies Backed by Private Equity

2019 ◽  
Vol 23 (4) ◽  
pp. 397-409
Author(s):  
Till Drebinger ◽  
Shailendra Kumar Rai ◽  
Heiko Hinrichs
Keyword(s):  
Initial Public Offerings ◽  
Private Equity ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Public Offerings ◽  
Ipo Performance ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
Short Run ◽  
The Impact

We examine 616 Indian initial public offerings (IPOs), including 116 IPOs backed by private equity (PE), between 2000 and 2016, to test whether PE-backed IPOs perform better than non-PE-backed IPOs in the short run as well as in the long run in terms of cumulative abnormal returns (CARs). We also examine the impact of the PE firm nationality on post-IPO performance. Consistent with the existing literature, we find underperformance for all IPOs, on an average, within 1 year. However, PE-backed IPOs have lower degree of underperformance than non-PE-backed IPOs. We also find that size, liquidity and leverage have a positive impact on the post-IPO performance after the financial crisis, whereas issue amount and capital issue year are negatively correlated to CARs before and during the crisis. We also find significant effects of PE firm nationality on CAR development. IPOs backed by India-dedicated PE firms perform best, while those backed by foreign PE firms perform worst and even underperform non-PE-backed IPOs. IPOs by foreign PE firms perform better if they co-invest with India-dedicated PE firms.

scholarly journals Market Performance of Sponsor-Backed Initial Public Offerings: An Empirical Analysis of the German Market

2018 ◽  
Vol 4 (1) ◽  
pp. 31
Author(s):  
Jung Maximilian ◽  
Jyoti Gupta
Keyword(s):  
Initial Public Offerings ◽  
Multivariate Regression ◽  
Private Equity ◽  
Market Performance ◽  
Abnormal Returns ◽  
Special Focus ◽  
Data Set ◽  
German Market ◽  
Public Offerings ◽  
Long Run

<p><em>This paper investigates the overall market performance of Initial Public Offerings (IPOs) in Germany, by analyzing the short and long run performance of IPOs, utilizing the data from 2000-2013. Furthermore the study aims to distinguish and compare the performance of sponsor backed IPOs to non-sponsor backed IPOs, by placing a special focus on the value creating abilities of financial sponsors. The examined data set consists of 286 IPOs out of which 46 can be considered as IPOs which were backed by financial sponsor. The study suggests that, on average, IPOs significantly underperform their benchmarks. Furthermore, the evidence implies significant differences across the IPO groups with regard to performance and operational indicators. The multivariate regression shows that in the long run, private equity firms outperform their counterparts, signified by greater buy-and hold abnormal returns respectively recorded within the three-year period after the IPO. </em></p>

scholarly journals The Short- And Long-Term Performance Of Privatization Initial Public Offerings In Europe

2013 ◽  
Vol 29 (4) ◽  
pp. 1189
Author(s):  
Haykel Hamdi ◽  
Duc Khuong Nguyen ◽  
Hassan Obeid
Keyword(s):  
Initial Public Offerings ◽  
Abnormal Returns ◽  
Public Offerings ◽  
Market Index ◽  
Long Run ◽  
Short And Long Term ◽  
Using Data ◽  
Long Term Performance ◽  
Term Performance

This article investigates the return behaviorof privatization initial public offerings (PIPOs) in Europe over both theshort- and long-run horizons. Using data from a sample of 162 PIPOs over theperiod 1986-2008, we show that European PIPOs outperform, in terms ofrisk-adjusted abnormal returns, a benchmark market index and a portfoliocomposed of 162 European private IPOs, regardless of the horizon of analysis.Our results are important for both investors and policymakers with respect totheir investment and privatization decisions, and also allow a betterunderstanding of the financial performance behavior of the privatizedstate-owned enterprises.

scholarly journals Aftermarket Performance of Health Care and Biopharmaceutical IPOs: Evidence From ASEAN Countries

2017 ◽  
Vol 54 ◽  
pp. 004695801772710
Author(s):  
Kulabutr Komenkul ◽  
Santi Kiranand
Keyword(s):  
Health Care ◽  
Stock Returns ◽  
Initial Public Offerings ◽  
Stock Prices ◽  
Abnormal Return ◽  
Abnormal Returns ◽  
The Philippines ◽  
Market Model ◽  
Long Run ◽  
Asean Countries

We examine the evidence from the long-run abnormal returns using data for 76 health care and biopharmaceutical initial public offerings (IPOs) listed in a 29-year period between 1986 and 2014 in the Association of Southeast Asian Nations (ASEAN) countries such as Indonesia, Malaysia, Singapore, Thailand, the Philippines, Vietnam, Myanmar, and Laos. Based on the event-time approach, the 3-year stock returns of the IPOs are investigated using cumulative abnormal return (CAR) and buy-and-hold abnormal return (BHAR). As a robustness check, the calendar-time approach, related to the market model as well as Fama-French and Carhart models, was applied for verifying long-run abnormal returns. We found evidence that the health care IPOs overperform in the long-run, irrespective of the alternative benchmarks and methods. In addition, when we divide our sample into 5 groups by listing countries, our results show that the health care stock prices of the Singaporean firms behaved differently from those of most of the other firms in ASEAN. The Singaporean IPOs are characterized by a worse post-offering performance, whereas the IPOs of Malaysian and Thai health care companies performed better in the long-run.

scholarly journals Long-run market performance of initial public offerings in Saudi Arabia: Does sharia-compliant status matter?

2017 ◽  
Vol 14 (3) ◽  
pp. 293-298 ◽  
Author(s):  
Faisal Alqahtani ◽  
Zakaria Boulanouar
Keyword(s):  
Saudi Arabia ◽  
Initial Public Offerings ◽  
Market Performance ◽  
Abnormal Returns ◽  
Firm Level ◽  
Public Offerings ◽  
Cumulative Abnormal Returns ◽  
Equality Of Means ◽  
Long Run ◽  
One Year

This research presents a comprehensive analysis of initial public offerings (IPOs) in Saudi Arabia, using a sample of 72 IPOs examined during the period between 2004 and September 2010. To compute the market performance of the IPOs, we split the sample into two sub-samples: sharia-compliant and non-sharia-compliant and we use two methods of calculations which are buy and hold abnormal returns (BHAR) and cumulative abnormal returns (CAR). In contrast to the majority of reported outcomes worldwide, our results show that based on one-year after-market performance, on average, underperformance does not exist in the Saudi market. The regression analysis shows that the factors driving long-run market performance include initial return and ownership structure, firm level risk, age and sharia-compliant status. The highlight of this paper, however, underscored using T-test for equality of means that was performed on the two sub-samples aftermarket adjusted returns is that Sharia-compliant status significantly alters the level of one-year market performance. This result supports our hypothesis that sharia-compliant firms will enjoy superior non-negative returns compared to non-sharia compliant firms, and supports the over-reaction hypothesis. Based on this result, we introduce a new factor which we call non-sharia-compliant underperformance.

scholarly journals Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan

2021 ◽  
Vol 2 (2) ◽  
pp. 97-140
Author(s):  
Muhammad Zubair Mumtaz ◽  
Ather Maqsood Ahmed
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Activity Period ◽  
Risk Level ◽  
Calendar Time ◽  
Public Offerings ◽  
Explanatory Variables ◽  
Ipo Performance ◽  
Long Run

This study investigates the long-run pricing performance of 90 IPOs listed on the Karachi Stock Exchange from 1995 to 2010. This study finds evidence that IPOs show signs of underpricing and underperform over three years after listing; however, the observed pattern of underperformance is not always statistically significant. The equal-weighted buy-and-hold abnormal returns and calendar-time analysis confirm the significance of the IPO underperformance over the three year period after listing on the exchange. Extreme bounds analysis is used to test the sensitivity and robustness of twenty six explanatory variables in determining the IPO underperformance. The results reveal that the robust predictors of IPO underperformance include underpricing, financial leverage, age of the firm and oversubscription for buy-and-hold return calculations and underpricing, hot activity period, post issue promoters’ holding, issue proceeds and aftermarket risk level for cumulative abnormal return calculations. Moreover, the fads hypothesis and the window of opportunity hypothesis are applied to explain long-run IPO performance.

scholarly journals The Pricing of Portuguese Privatisation Second Initial Public Offerings

2014 ◽  
Vol 2014 ◽  
pp. 1-13
Author(s):  
Rui Alpalhão
Keyword(s):  
Empirical Evidence ◽  
Initial Public Offerings ◽  
Abnormal Returns ◽  
Alternative Methods ◽  
Public Offerings ◽  
The Past ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
Short Run ◽  
Good Rating

The paper studies the pricing of PSIPOs (privatization second initial public offerings) PIPOs of companies that had been public in the past. A dataset comprising all the Portuguese companies nationalized in 1975 and privatized in the late eighties and nineties is used. Findings on short- and long-run pricing of IPOs and PIPOs are summarized, and implications for the pricing of PSIPOs are discussed. Short- and long-run returns are computed, using three alternative methods (buy and hold abnormal returns, wealth relatives, and cumulative abnormal returns) in the long-run analysis. Short-run overpricing is identified, unlike the underpricing pattern revealed by most IPO research. This initial overpricing is essentially found to be corrected in the first trading month. In the long-run, no evidence of overpricing is found, again unlike the usual conclusion of the IPO literature, and more in line with empirical evidence on second IPOs. Results provide support to the conclusion that privatization IPOs tend to be less underpriced than standard IPOs and that firms coming back to the market for a second IPO tend to be less underpriced than pure IPOs and provide a good rating for the performance of the Portuguese Republic pricing stocks in the Portuguese privatization program.

scholarly journals Corporate governance standards in cross-border investing: lessons learned from Chinese companies listed in the United States

2014 ◽  
Vol 11 (3) ◽  
pp. 429-437 ◽  
Author(s):  
Hugh Grove ◽  
Maclyn Clouse
Keyword(s):  
United States ◽  
Corporate Governance ◽  
Initial Public Offerings ◽  
Stock Prices ◽  
Boards Of Directors ◽  
Stock Price ◽  
The United States ◽  
Lessons Learned ◽  
Public Offerings ◽  
Chinese Company

This paper will examine five Chinese company stocks that have been listed on United States exchanges with either initial public offerings (IPOs) or reverse mergers, often called reverse take-overs (RTOs). Their shares were initially well received in the market, especially as China’s economy continued to grow at rates much higher than the rest of the world’s countries, with increasing stock prices creating significant gains for their investors. However, in spite of these firms’ apparent compliance to the U. S. regulations, there is now evidence of fraud, poor auditing, and a lack of corporate governance and control. The resultant stock price declines have led to billions of dollars of losses for investors, and some of these Chinese firms have subsequently been delisted by U. S. stock exchanges. In this paper, we will show that had auditors, boards of directors, and financial analysts been more diligent and responsible, these problems could have been identified earlier than they were. Perhaps some of the investors’ losses could have been prevented

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