scholarly journals THE PERCEPTION OF INVESTORS TOWARDS INITIAL PUBLIC OFFERING: EVIDENCE OF NEPAL

2021 ◽  
Vol 10 (01) ◽  
pp. 76-86
Author(s):  
Achut Gnawali ◽  
Ballav Niroula
Keyword(s):  
Quality Management ◽  
Initial Public Offering ◽  
Investment Decision ◽  
Investment Decisions ◽  
Company Performance ◽  
Market Information ◽  
Management Company ◽  
Public Offering ◽  
Company Sector ◽  
The Relationship

The main aim of this study is to examine the perception of investors towards initial public offering (IPO), to analyze the relationship between different factors (quality management, company goodwill, company performance, company sector, and market information) and investment decision to examine the factors that impact in IPO to making an investment decision. This research used primary data. The data was collected from 290 respondents which were related to five different brokerage firms at Kathmandu district. The inferential analysis was preferred in SPSS by using statistical tools such as correlation and regression analysis to analyze the relationship between variables and the impact of different factors on investment decisions. The study revealed that quality management, company goodwill, company performance, company sector, and market information are the highly considerable factors before making investment decisions in IPO.    

R&D investment decisions of IPO firms and long-term future performance

2018 ◽  
Vol 17 (1) ◽  
pp. 78-108 ◽  
Author(s):  
Tatiana Fedyk ◽  
Natalya Khimich
Keyword(s):  
Stock Returns ◽  
Initial Public Offering ◽  
Investment Decision ◽  
Investment Decisions ◽  
Poor Performance ◽  
Net Income ◽  
Cross Sectional ◽  
Content Type ◽  
Public Offering ◽  
D Investment

Purpose The purpose of this paper is to link valuation of different accounting items to research and development (R&D) investment decisions and investigate how suboptimal R&D choices during initial public offering (IPO) are linked to future operating and market underperformance. Design/methodology/approach For firms with substantial growth opportunities, accounting net income is a poor measure of the firm’s performance (Smith and Watts, 1992). Therefore, other metrics such as R&D intensity are used by investors to evaluate firms’ performance. This leads to a coexistence of two strategies: if earnings are the main value driver, firms tend to underinvest in R&D; and if R&D expenditures are the main value driver, firms tend to overinvest in R&D. Findings The authors show that the R&D investment decision varies systematically with cross-sectional characteristics: firms that are at the growth stage, unprofitable or belong to science-driven industries are more likely to overinvest, while firms that are able to avoid losses by decreasing R&D expenditure are more likely to underinvest. Finally, they find that R&D overinvestment leads to future underperformance as evidenced by poor operating return on assets, lower product market share, higher frequency of delisting due to poor performance and negative abnormal stock returns. Originality/value While prior literature concentrates on R&D underinvestment as a tool of reporting higher net income, the authors demonstrate the existence of an alternative strategy used by many IPO firms – R&D overinvestment.

Friends in high places : two essays on the importance of corporate political connections

2015 ◽  
Author(s):  
◽  
Reza Houston
Keyword(s):  
Initial Public Offering ◽  
Political Connections ◽  
Target Firm ◽  
University Of Missouri ◽  
Accounting Performance ◽  
The Public ◽  
Public Offering ◽  
The University ◽  
The Impact ◽  
The Relationship

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] This study is an examination of the relationship between political connections and the undertaking of major firm events. In our first essay, presented in Chapter 3, we examine the impact politically connected appointments have on firm acquisition behavior. Using proxy statements, we create a unique database of politically connected bidders and merger targets. We find that bidders who hire connected individuals to the board or management team are more likely to avoid merger litigation. Connected bidders make more bids after the appointment. These firms also bid on larger targets. We determine there is a positive relation between the control premium and the relative of the target's connections. Connected acquirers have superior post-merger accounting performance, particularly when they acquire a connected target firm. In the second essay, presented in Chapter 4, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement information, we create a unique database of politically connected IPO firms. We find that political connections are substitutes to high-quality underwriters and big four auditors. Politically connected firms manage earnings more highly upward than non-connected firms prior to the public offering. Politically connected firms also exhibit less underpricing than non-connected firms. Politically connected IPO firms also have superior post-IPO returns relative to non-connected IPO firms.

Relationship between prestige signals and over-subscription ratio

2019 ◽  
Vol 15 (4) ◽  
pp. 564-579 ◽  
Author(s):  
Ali Albada ◽  
Othman Yong ◽  
Soo-Wah Low
Keyword(s):  
Initial Public Offering ◽  
Design Methodology ◽  
Executive Board ◽  
Cross Sectional ◽  
Content Type ◽  
Underwriter Reputation ◽  
Reputational Capital ◽  
Public Offering ◽  
The Relationship ◽  
Institutional Participation

PurposeThe purpose of this paper is to examine whether initial public offering (IPO) over-subscription is a function of firm’s prestige signals conveyed by third parties with reputational capital such as underwriter, auditor and independent non-executive board member.Design/methodology/approachThe relationship between prestige signals and over-subscription ratio (OSR) of IPOs is analysed using a cross-sectional regression based on a sample of 393 IPOs issued between January 2000 and December 2015.FindingsThe results indicate that IPOs underwritten by reputable underwriters have lower OSR than those underwritten by non-reputable underwriters. While issuer engages reputable underwriter to certify firm quality to reduce information asymmetry, the action brings with it lower initial returns for its IPO. Investors interpret the signal conveyed by issuer’s choice of underwriter from under-pricing perspective and respond accordingly by reducing IPO demand. This implies that investors regard under-pricing as a more valuable signal than firm quality signal associated with underwriter reputation. The findings also indicate that over-subscription increases in IPOs that have above average initial returns and higher institutional participation. Issuing firms that go public in a period of high IPO volume are associated with low OSR.Originality/valueThis is the first paper to examine the relationship between the prestige signals and OSR of IPOs in the Malaysian context.

Performance of Indian IPOs: An Empirical Analysis

2017 ◽  
Vol 18 (3) ◽  
pp. 734-749 ◽  
Author(s):  
Rekha Handa ◽  
Balwinder Singh
Keyword(s):  
Corporate Governance ◽  
Empirical Analysis ◽  
Initial Public Offering ◽  
Investment Decision ◽  
Ipo Underpricing ◽  
Board Committees ◽  
Effective Signal ◽  
Public Offering ◽  
Major Consideration ◽  
Ownership Patterns

The present research study contributes to the extant literature on underpricing rather uniquely by addressing the under-researched linkage of corporate governance to underpricing. The originality of this effort also lies in being one of the initial efforts of exploring governance in context of initial public offering (IPO) underpricing in Indian settings. The study comprises an empirical analysis of 404 Indian IPOs studied for their board structures and ownership attributes using IPO prospectuses. Drawing support from the signalling theory, the variables board size and board committees exhibit a significant positive relationship to the IPO returns on the listing day. In Indian markets characterized by concentrated family-owned firms, promoter ownership does work as an effective signal for investors who take cues of firm potential from ownership patterns. Corporate governance measures have a miniscule contribution in explaining the underpricing of Indian IPOs and indicating that investors do not incorporate these as a major consideration in their investment decision.

scholarly journals Study of Investment Decisions and Personal Characteristics through Risk Tolerance: Moderating Role of Investment Experience

2020 ◽  
Vol 9 (34) ◽  
pp. 57-68
Author(s):  
Nasira Perveen ◽  
Ashfaq Ahmad ◽  
Muhammad Usman ◽  
Faiza Liaqat
Keyword(s):  
Positive Impact ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Personal Characteristics ◽  
Risk Tolerance ◽  
Individual Investors ◽  
Financial Advisors ◽  
Investment Experience ◽  
The Relationship

Investment decisions could be affected by behavioral biases associated with personal characteristics. This study empirically investigates the effect of personal characteristics on investors’ investment decision through risk tolerance. Furthermore, investment experience moderates the nexus between personal characteristics and risk tolerance. The scale consisting of 24 items was used related to selected constructs and variables. Data was collected form 175 individual investors of Pakistan Stock Exchange. PLS-SEM was used to make statistical analysis. The findings indicate that extraversion has substantial positive impact on investment decisions. Moreover, risk tolerance partially mediates the relationship between extroversion and investment decisions. The relationship between introversion and investment decisions is negative and risk tolerance partially mediates the aforesaid relationship. Furthermore, it is statistically proved that investment experience substantially moderates the association between extraversion and risk tolerance. However, investment experience does not play any conditional role in the association between introversion and risk tolerance. This study can be helpful for financial advisors to provide best consultancy to their clients (investors), while considering their personal characteristics.

Franchising and initial public offering: a signaling perspective

2018 ◽  
Vol 46 (11/12) ◽  
pp. 1193-1208 ◽  
Author(s):  
Ilan Alon ◽  
B. Elango
Keyword(s):  
Initial Public Offering ◽  
Signaling Theory ◽  
Threshold Level ◽  
Resource Scarcity ◽  
Content Type ◽  
Logistic Regression Models ◽  
Management Commitment ◽  
Top Management Commitment ◽  
Public Offering ◽  
The Relationship

Purpose The purpose of this paper is to examine the factors associated with franchisors going public using signaling theory. Listing on the stock market is a sign that the business concept has reached a threshold level of acceptance and success. To increase the relevance of this study to practitioners, the authors focus on franchising-specific controllable variables. Design/methodology/approach This study uses a sample of 2,134 franchisors from US drawn from a survey by Entrepreneur magazine during the years 2015–2016. Binominal logistic regression models are used for analysis of the data. Findings Findings indicate that time to franchise, international operations, franchise association affiliation, disclosure and extent of top management commitment are factors positively related to the likelihood of a franchisor being publicly listed. Research limitations/implications Study findings are based on a sample of franchisors from North America, where financial markets are well developed, and due caution should be exercised before generalizations are made to other contexts. A major implication of this study is that signaling theory may provide an important supplement to the already well-entrenched resource-scarcity and agency theoretic explanations in franchising research. Originality/value While signaling theory is growing in importance in the franchising literature, this study is the first to uncover the relationship between company signals and initial public offering.

The Impact of Global Financial Crisis on IPO Underpricing in Malaysian Stock Market

2018 ◽  
Vol 21 (04) ◽  
pp. 1850023 ◽  
Author(s):  
Hon-Wei Leow ◽  
Wee-Yeap Lau
Keyword(s):  
Financial Crisis ◽  
Initial Public Offering ◽  
Global Financial Crisis ◽  
Emerging Market ◽  
Ipo Underpricing ◽  
Dummy Variable ◽  
The Global Financial Crisis ◽  
Public Offering ◽  
The Impact ◽  
The Relationship

This study examines the impact of the Global Financial Crisis (GFC) on Initial Public Offering (IPO) underpricing in the context of an emerging market from January 2006 to December 2011. Models consist of hierarchical and dummy variable regressions have been evaluated. Our results show, firstly, by comparison between the pre-GFC, GFC and post-GFC periods, it can be observed that IPOs initial returns (offer-to-close) are generally lower due to the crisis. Secondly, IPO underpricing provides an average of 17–25% of initial returns in the pre-GFC period, 1–3% during GFC period, and 3–7% in the post-GFC period. Thirdly, the financial crisis does not act as a moderator that worsens the relationship between underpricing of IPO and oversubscription ratio. Lastly, this study dispels the notion that investors should totally shun IPO during crisis period as there are still positive initial returns among the new issues. To the authors’ knowledge, this is the first study on the impact of the GFC on IPO underpricing in Malaysia.

scholarly journals Are Distances Barriers to Sustainability for Venture Capital Syndication?

2019 ◽  
Vol 11 (15) ◽  
pp. 4126
Author(s):  
Bing Liu ◽  
Hui Jiang
Keyword(s):  
Venture Capital ◽  
Initial Public Offering ◽  
Geographic Distance ◽  
Moderating Effects ◽  
Tourism And Hospitality ◽  
Public Offering ◽  
Made In China ◽  
The Relationship ◽  
The Empirical Analysis ◽  
Made In

This study aimed to explore how both geographic and industry distances, as potential barriers, affect the sustainability for venture capital (VC) syndication. Specifically, we examined the influences of initial public offering (IPO) activity as a market environment factor and foreign VC as a firm character on VC syndication in the tourism and hospitality sectors, together with the consideration of moderating effects of geographic and industry distances. Using a purposefully developed dataset of VC deals made in China, involving 645 VC firms and 592 VC-backed venture companies from 1991 to 2017, the empirical analysis indicated that both IPO activity and foreign VC were positively related to VC syndication. Geographic distance was found to negatively moderate the relationship between IPO activity and VC syndication; on the contrary, industry distance was found to positively moderate the relationship between foreign VC and VC syndication. These findings revealed that distances are not necessarily barriers to sustainability for VC syndication. This study provided an integrated view on the factors and barriers influencing the sustainability of VC syndication in tourism and hospitality sectors. It advances the knowledge of VC syndication in tourism investment and sheds light on sustainable entrepreneurship in tourism and hospitality.

scholarly journals Determinants of ICO Investment Decision: An Exploratory Factor Analysis

2020 ◽  
Vol 11 (5) ◽  
pp. 69
Author(s):  
Nurettin Ayarci ◽  
Ayse Ozden Birkan
Keyword(s):  
Initial Public Offering ◽  
Online Survey ◽  
Investment Decision ◽  
Digital Currency ◽  
Funding Mechanism ◽  
High Profit ◽  
Principal Factors ◽  
Specific Factors ◽  
Public Offering ◽  
Short Time

An Initial Coin Offering (ICO) is a funding mechanism used by projects to sell their crypto-token in exchange for Bitcoin, Ether, etc. It is the counterpart of the Initial Public Offering in the new digital currency economy. ICOs help projects to be funded in a short time with a high-profit margin.The primary purpose of this study is isolating the principal factors that affect the decision to invest in an ICO. A large array of potential signals, consisting of promotion and marketing effects, investor motivation, founder team effects, whitepaper and ICO specific factors, are considered in an online survey and the responses are analyzed using Exploratory Factor Analysis.The results of the analysis reveal five composite principal factors that determine the decision to invest in an ICO. These five principal factors are the ICO whitepaper, websites for finance news and ICO listings, ICO project sector and founder, ICO project team and social media. Our findings provide a perspective to both investor and ICO founders about which factors to prioritize when deciding to launch an ICO or to invest in one. 

scholarly journals Study on the Relationship Between the Audit Committee of Ipo Firms and the First-Day Stock Earnings

2020 ◽  
Vol 4 (2) ◽  
pp. 21
Author(s):  
She Zhangying
Keyword(s):  
Regression Analysis ◽  
Stock Returns ◽  
Initial Public Offering ◽  
Audit Committee ◽  
Stock Exchange ◽  
Public Offering ◽  
The Relationship

This paper mainly discusses the relationship between the audit committee of IPO firms and the stock returns on the first day of trading on the stock exchange. Using the sample of 21 firms that made an initial public offering in ASX between 2008 and 2010, Regression analysis was used to conclude that the existence of the audit committee of IPO firms and listed on the first day of the stock returns have no significant direct relationships. The result shows that the audit committee has no effect on the earnings of the first day of listing, and the establishment of the audit committee may not be considered before listing.

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