scholarly journals Net deferred tax assets and the long-run performance of Initial Public Offerings

2019 ◽  
Vol 16 (4) ◽  
pp. 111-127
Author(s):  
Jost Kovermann ◽  
Patrick Velte
Keyword(s):  
Initial Public Offerings ◽  
Stock Price ◽  
Balance Sheet ◽  
Important Lesson ◽  
Going Public ◽  
Accounting Data ◽  
Deferred Tax Assets ◽  
Long Run ◽  
Deferred Tax ◽  
Loss Firms

On average, firms’ going public severely underperform compared to the market, a phenomenon which is widely known in the literature as IPO underperformance. Though there is no generally accepted theory on the reasons, information asymmetries and the scarcity of information on the issuers is generally considered to contribute to the phenomenon. Accounting data provided by issuers in the offering prospectuses is mostly backward-looking information that is of limited use in forming expectations of future performance. This problem becomes even more pressing, given the increasing fraction of loss firms among IPOs. Net deferred tax assets (NDTA), however, are a balance sheet item that can be expected to include forward-looking information on future earnings. Reporting under IFRS, firms may recognize NDTA only to the extent, that positive income will be available in future periods. We, therefore, expect NDTA to be positively associated with the long-run performance of IPOs. Investigating a sample of firms going public in Germany between 2005 and 2015, we find that NDTA are positively associated with long-run stock price performance. The association is particularly strong among loss firms. Our findings are relevant especially to investors, who regularly have difficulties valuing loss firms. We show that firms which recognized NDTA perform much better in the aftermarket than those that do not have NDTA on the balance sheet. The most important lesson to be learned is that IPO firms that did not recognize NDTA will likely be very poor investments.

scholarly journals The Berlin Stock Exchange in Imperial Germany: A Market for New Technology?

2016 ◽  
Vol 106 (11) ◽  
pp. 3558-3576 ◽  
Author(s):  
Sibylle Lehmann-Hasemeyer ◽  
Jochen Streb
Keyword(s):  
Initial Public Offerings ◽  
Industrial Revolution ◽  
Stock Exchange ◽  
New Technology ◽  
Going Public ◽  
Public Offerings ◽  
Imperial Germany ◽  
Long Run ◽  
Innovative Firms ◽  
Surprising Fact

Analyzing 474 cases of firms going public in the German capital between 1892 and 1913, we show that innovative firms could rely on the Berlin stock market as a source of financing. Our data also reveal that initial public offerings (IPO) of innovative firms were characterized by particularly low underpricing, comparatively high first trading prices, and no long-run underperformance. We interpret these empirical results as evidence for the surprising fact that in the period of the Second Industrial Revolution the Berlin stock exchange was already a well-functioning market for new technology. (JEL G14, N23)

scholarly journals KINERJA JANGKA PENDEK DAN JANGKA PANJANG SAHAM PERUSAHAAN IPO DI BURSA EFEK INDONESIA

2019 ◽  
Vol 2 (2) ◽  
pp. 437
Author(s):  
Andrew Budiman
Keyword(s):  
Initial Public Offerings ◽  
Stock Price ◽  
Secondary Market ◽  
Public Offerings ◽  
Independent Variables ◽  
Long Run ◽  
Underwriter Reputation ◽  
Long Term Performance ◽  
Term Performance ◽  
Auditor Reputation

The objectives of this research is to examine the effect of qualitative and quantitative factors to underpricing ( Y1 ), long-run underperformance ( Y2 ), and underpricing effect to long-run underperformance ( Y3 ) with ROA, DER, ROE, Age, Size, Underwriter Reputation, Auditor Reputation and Gross Proceeds as independent variables. Initial Public Offerings ( IPO ) is one of alternatives for companies to get fund from external sources in fulfilling it needs. Three phenomenons related with IPO’s are underpricing, hot-issue market and long-run underperformance. The most frequently happened phenomenon is underpricing which is a phenomenons marked by lower offering price compared to 1st day closing price. The second phenomenon, hot-issue market, is marked by abnormal higher IPO’s frequency, high abnormal underpricing rate, and stock’s oversubscription. Under this condition  investors become more optimist and become an advantage for companies to get external funds through IPO’s, but in secondary market stock price will be corrected naturally and it’s long term performance oftenly worst than non-IPO’s company. This is what so called as long-run underperformance. This study use underpriced IPO’s stocks in Bursa Efek Indonesia for period 2012 to 2015 as sample and use e-views 7 to analyze it. The result shows that only DER don’t have effect significant to Y1, only Auditor Reputation and Gross Proceeds variables don’t have significant effect to Y2 and finally  Y1 have significant effect to Y3. R-squared shows for Y1,Y2 and Y3 indicates that still many independent variables gives significant effects to Y1 and Y2. 

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.

Goodyear Tire & Rubber Company: Follow-On Equity Issue

2017 ◽  
pp. 1-20
Author(s):  
Susan Chaplinsky ◽  
Warren Estey
Keyword(s):  
Stock Price ◽  
Intrinsic Value ◽  
Balance Sheet ◽  
Cost Savings ◽  
Indirect Costs ◽  
Equity Offerings ◽  
Equity Issue ◽  
Long Run ◽  
Investment Manager ◽  
Additional Value

This case explains marketing process for follow-on equity offerings, the direct and indirect costs of issue, and the long-run performance of equity issuers. Students use analysts' projections from which to estimate the intrinsic value of the company's share—including the cost savings from the VEBA and financial improvements over the next several years. It is appropriate for use in corporate finance courses covering the topics of capital raising, equity financing, capital structure, costs of financing, funding alternatives, investment banking, and valuation. It presents the classic profile on an equity issuer—a firm whose stock price has risen to new heights in recent months. Will the issue lead to additional value that creates opportunities for shareholders, or is it a sign the firm is overvalued? The case explores the thinking of a prominent investment manager who had accumulated a large stake in Goodyear and who did not see the need for Goodyear to make an equity issue at this time. The company's position was that the high stock would allow it to further strengthen its balance sheet and pursue international growth opportunities. Students are asked to decide what the investor should do with respect to the current offer—buy, sell, or hold.

Marketing spending and aftermarket performance of IPO firms

2017 ◽  
Vol 35 (4) ◽  
pp. 560-576 ◽  
Author(s):  
Monica B. Fine ◽  
Kimberly Gleason ◽  
Michael Mullen
Keyword(s):  
Initial Public Offerings ◽  
Stock Price ◽  
Market Conditions ◽  
Content Type ◽  
Price Performance ◽  
Long Run ◽  
Short Run ◽  
Marketing Expenditures ◽  
Marketing Spending ◽  
The Impact

Purpose Increasingly, marketing managers are asked to consider the financial implications, in terms of both book and market values, when making strategic decisions. The purpose of this paper is to investigate the role of marketing expenditures in explaining the variation in the aftermarket performance of a sample of firms conducting initial public offerings (IPOs). Design/methodology/approach Theories from marketing and finance – market-based assets (MBA) theory and signaling theory respectively – serve as the conceptual basis of this paper. The results of this study, based on a sample of 2,103 IPOs covering the 1996 to 2008 time period, suggest that increased marketing spending positively impacts aftermarket (i.e. stock price) performance. Findings The authors find that while short-run aftermarket performance is positively and significantly impacted by pre-IPO marketing spending, long-run firm performance measures do not appear to be impacted by pre-IPO marketing spending. Further, pre-IPO marketing spending does not incrementally reduce underpricing or improve long-run performance when the IPO takes place during extreme market conditions such as recessions or hot markets, and these results are important to the shareholders and potential investors in the firm. Research limitations/implications Theoretically this paper advances the literature on the marketing-finance interface by extending the MBA and signaling theories. For practice, the results indicate that spending more money on marketing before the IPO and disclosing this information produces positive bottom-line results for the firm. Originality/value While Luo (2008) documents a significant relationship between the firms’ pre-IPO marketing spending and IPO underpricing, few studies explore the impact of marketing spending on stock price performance beyond the first day of trading. This paper makes three unique contributions. First, the authors extend Luo’s study by investigating the effect of marketing expenditures on underpricing during extreme market conditions. Second, the authors are the first to examine IPO performance in the long-run as well as the short-run. Finally, the authors assess how long-run performance is impacted by marketing spending during extreme market conditions. The findings of this study has implications for managers and shareholders of firms considering going public through a traditional IPO.

scholarly journals Long-run performance of initial public offerings in the German stock market: The family business experience 1977 to 1998

2007 ◽  
Vol 4 (4) ◽  
pp. 357-396
Author(s):  
Jan Kuklinski ◽  
Dirk Schiereck
Keyword(s):  
Initial Public Offerings ◽  
Firm Value ◽  
Stock Price ◽  
Family Firms ◽  
Equity Capital ◽  
Public Offerings ◽  
Price Performance ◽  
Long Run ◽  
Neuer Markt ◽  
The Impact

This paper investigates the long-run performance of initial public offerings of 174 family firms floated in Germany between 1977 and 1998. Family businesses typically come closest to the ideal of non- separation of ownership from control. The fundamental change in ownership structure induced by the flotation represents a change in the governance of the firm as for the first time dispersed outsiders buy equity capital. An examination of the stock price performance allows drawing conclusions to explain the impact of governance changes on firm value. A prediction of stock price performance spans two theories: Advantages of modern corporations where management and ownership are separated are cut short by the so-called principal-agent problem. Managers – the agents – could take actions against the interest of shareholders – the principals. Agency problems in closely-held family firms should be less predominant. On the other hand, the rent-protection theory predicts that family owners have incentives to skim private benefits at the expense of firm performance. Depending on the extent of these two effects, family-owned firms should out-, respectively underperform the market. The empirical evidence seems to support the private benefit hypothesis: 3 years after the listing the market-adjusted return was on average –25.31% compared to a broad index. The underperformance increased to –53.50% after 60 months. Even when excluding potential new economy and Neuer Markt biases, the underperformance is a statistically significant –10.50% and –50.13%, respectively.

The Desire to Acquire and IPO Long-Run Underperformance

2012 ◽  
Vol 47 (3) ◽  
pp. 493-510 ◽  
Author(s):  
James C. Brau ◽  
Robert B. Couch ◽  
Ninon K. Sutton
Keyword(s):  
Initial Public Offerings ◽  
Calendar Time ◽  
Cross Sectional ◽  
Going Public ◽  
Public Firms ◽  
Public Offerings ◽  
Long Run ◽  
The Mean ◽  
Time Frames ◽  
The Impact

AbstractWe analyze 3,547 initial public offerings (IPOs) from 1985 through 2003 to determine the impact of acquisition activity on long-run stock performance. The results show that IPOs that acquire within a year of going public significantly underperform for 1- through 5-year holding periods following the 1st year, whereas nonacquiring IPOs do not significantly underperform over these time frames. For example, the mean 3-year style-adjusted abnormal return is – 15.6% for acquirers and 5.9% for nonacquirers. Our cross-sectional and calendar-time results suggest that the acquisition activity of newly public firms plays an important and previously unrecognized role in the long-run underperformance of IPOs.

Features of Audit of Accounting (Financial) Statements of the Organizations Which Are Ahead of Schedule Applying in Accounting the Balance Method of Accounting of Temporary Differences

Auditor ◽  
2019 ◽  
Vol 5 (9) ◽  
pp. 17-30 ◽  
Author(s):  
Людмила Сотникова ◽  
Lyudmila Sotnikova
Keyword(s):  
Income Tax ◽  
Balance Sheet ◽  
Financial Statements ◽  
Balance Method ◽  
Accounting Standard ◽  
Current Income ◽  
Deferred Tax Assets ◽  
National Accounting ◽  
Ministry Of Finance ◽  
Deferred Tax

Th e article is devoted to the topical practical issues of accounting and auditing arising in connection with the amendments to the Federal accounting standard 18/02 «Accounting of calculations of profi t tax» by the Ministry of Finance of Russia No. 236h from 20.11.2018, the essence of which is that in national accounting practices is being promoted balance method of determining the amount of the current income tax, deferred tax assets and liabilities. The article deals with the principal provisions of the balance sheet method of accounting for diff erences between accounting and tax financial results, the use of which will be mandatory from 2020, while in 2019 it is possible to early voluntary application of the balance sheet method by reporting organizations.

Business Environment in West Bengal: An Ethical Issue

Think India ◽  
2016 ◽  
Vol 19 (1) ◽  
pp. 35-41
Author(s):  
Sreekumar Ray
Keyword(s):  
West Bengal ◽  
Balance Sheet ◽  
Business Environment ◽  
Business Practices ◽  
Ethical Business ◽  
Industrial Growth ◽  
Long Run ◽  
Fixed Assets ◽  
Finance Company ◽  
Set Up

Ethics in Business are keywords in any business environment which are lacking in most of the cases. In a broad sense ethics means not to cheat others and to do the business in an honest way, to abide by the rules and regulations of the soil, and above all to keep the morale high so that the business can grow to a new height in long run. Unfair means and unethical business practices to earn money quickly are often fraught with the danger of losing the business permanently or losing the goodwill and respect of society. West Bengal has got bad reputation for industrial growth and fake chit funds and it has been named as ponzy capital of India by many as 72 out of 86 fake chit funds are in the state of West Bengal (as per the Report of Ministry of Corporate Affairs, Govt. of India). On the other hand the micro finance company Bandhan which has got Banking license last year (set up in 2001 in West Bengal) and Eins Edutech the company which was originally incorporated on March 9, 1983, as Ganpat Udyog in West Bengal are worth mentioning and at ease one can feel proud of them. As on 17th April, 2015 the latter company has got market capital of Rs.700 crore with its fixed assets, as per its balance sheet, as only two cell phones and one printer. As per monthly status of Bandhan in February 2015 it has 2,022 branches, 63,66,269 borrowers, 15,956 staff, loan disbursed for the month Rs.1,572 crores, and loan outstanding Rs.8,908 crores. Under such situation, this study focuses on the ethical business environment prevailing in West Bengal and the strategies adopted by them.

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