scholarly journals The Impact on IPO Assurance Fees of Commercial Bank Entry into the Equity Underwriting Market

2000 ◽  
Vol 19 (s-1) ◽  
pp. 23-35 ◽  
Author(s):  
Neil L. Fargher ◽  
L. Paige Fields ◽  
Michael S. Wilkins
Keyword(s):  
Commercial Bank ◽  
Initial Public Offering ◽  
Commercial Banks ◽  
The United States ◽  
Litigation Risk ◽  
Equity Offerings ◽  
Accounting Firms ◽  
Bank Equity ◽  
Public Offering ◽  
The Impact

Changes in the provisions of the United States Banking Act of 1933 have allowed the entry of commercial banks into the initial public offering (IPO) underwriting market. In this paper, we examine the effect of commercial bank equity underwriting on the fees paid to auditors. We predict that IPO assurance fees will be higher for equity offerings underwritten by commercial banks than for offerings handled by traditional underwriters because (1) commercial banks are relatively inexperienced in bringing firms public, requiring additional assistance from accounting firms in the IPO process; (2) new entrants into the underwriting market may manage lower quality issues that require additional assurance services; and/or (3) since commercial banks have greater resources than do traditional investment banks, they are likely to be exposed to greater litigation risk, providing incentives for commercial bank underwriters to ensure that the IPO firm purchases greater assurance from the auditor. However, we expect fees to decrease if a previous lending relationship existed between the commercial bank and its client. Our findings, based on a sample of issues brought to market between 1991 and 1997, support these expectations.

scholarly journals The Impact of R&D Alliance on the Survival of Newly Listed High Tech Firms

2016 ◽  
Vol 6 (2) ◽  
pp. 197
Author(s):  
Vicar S. Valencia
Keyword(s):  
United States ◽  
Longitudinal Data ◽  
Financial Performance ◽  
Initial Public Offering ◽  
The United States ◽  
High Tech ◽  
Estimation Strategy ◽  
Public Offering ◽  
The Impact

This paper investigates the extent to which R&D alliance participation affects the survival performance of newly listed high tech firms. The estimation strategy identifies the impact through changes on a firm’s alliance status. Using longitudinal data on high tech firms that had an initial public offering in the United States, results suggest that R&D collaborating firms experience greater survival, relative to non-R&D collaborating firms. In particular, participation in an R&D alliance is associated with an attenuation of delistment due to poor financial performance.

scholarly journals A chronological review of the Australian litigation risk environment surrounding IPO earnings forecasts

2018 ◽  
Vol 30 (2) ◽  
pp. 168-186 ◽  
Author(s):  
Tracy C. Artiach ◽  
Gerry Gallery ◽  
Kimberley J. Pick
Keyword(s):  
Initial Public Offering ◽  
Historical Analysis ◽  
Earnings Forecasts ◽  
Institutional Setting ◽  
Regulatory Change ◽  
Litigation Risk ◽  
Risk Environment ◽  
Content Type ◽  
Public Offering ◽  
The Impact

Purpose This paper aims to provide a chronological review of changes in the institutional setting regulating Australian initial public offering (IPO) firms’ earnings forecasts over the period from 1994 to 2012. The changing forecasting environment covers both IPO firms’ prospectus earnings forecasts and post-listing updates to those forecasts. Design/methodology/approach This historical analysis reviews the changes in corporate regulation and enforcement, Australian Securities Exchange listing requirements and the outcomes of securities class actions (SCA) that affect IPO firms’ earnings forecasts. Findings A review of the institutional setting regulating Australian IPO firms’ earnings forecasts reveals two inter-temporal shifts in (increasing) litigation risk over 1994-2012 period which have arisen from more onerous regulations, stronger regulatory enforcement and a more active SCA market. The authors document the corporate responses to those shifts. Originality/value This is the first study to comprehensively document research of an inter-temporal litigation risk shift on IPO firms’ earnings forecasting behaviour. It therefore provides a formative base and a useful resource for researchers, practitioners and investigators (regulators, forensic accountants, etc.) when examining the impact of the changes on IPO firms’ forecasting behaviour following regulatory change and enforcement.

“Success by Association”: The Impact of Venture Capital Firm Reputation Trend on Initial Public Offering Valuations

2019 ◽  
Vol 47 (2) ◽  
pp. 368-398 ◽  
Author(s):  
Salim Chahine ◽  
Igor Filatotchev ◽  
Garry D. Bruton ◽  
Mike Wright
Keyword(s):  
Venture Capital ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Central Element ◽  
The United States ◽  
Firm Reputation ◽  
Public Offerings ◽  
Experience Intensity ◽  
Public Offering ◽  
The Impact

Organizational theory recognizes reputation as a central element to understanding the firm. Examining investor valuations of 1,676 initial public offerings (IPOs) in the United States from 1990 to 2011, we find that reputation transfer through an association of an IPO firm with a venture capital (VC) firm represents a resource whose value can increase/decrease over time depending on investors’ valuations of prior IPOs funded by a VC firm. We conclude that the impact of reputation transfer through association is not unidirectional but, instead, is to be viewed in the context of prior reputational development of organizations the focal firm is associated with. Furthermore, we find that three “transfer enhancers” can improve the impact of VC firm reputation transfer on IPO valuations, including the VC firm’s past experience intensity, the diversity of IPO experiences, and the number of prior syndicated IPOs involving the VC firm as a lead investor.

Estimation of Securities Positioning Efficiency in Commercial Banks

2021 ◽  
pp. 235-256
Author(s):  
Natalia Frolova ◽  
Evgeniy Frolov
Keyword(s):  
Statistical Analysis ◽  
Literature Review ◽  
Commercial Bank ◽  
Initial Public Offering ◽  
Commercial Banks ◽  
Least Squares Method ◽  
Econometric Analysis ◽  
Public Offering ◽  
The Given ◽  
Critical Literature

The given research is devoted to the acute issue of efficiency of valuable assets positioning carried out by commercial banks. The chapter is aimed at examining factors that affect the efficiency of securities placement by commercial banks, as well as an econometric analysis based on the least squares method of the significance of the selected factors and their impact on the efficiency indicator. While researching this issue, the phenomenon of adaptability, which means the higher the price set, is in comparison with the medium price scale, the higher the underpricing at setting with corresponding other equal terms was singled out The methods of critical literature review, statistical analysis, and econometric model creation have been used to justify it. Moreover, the research resulted in model creation, which characterizes the state of a definite commercial bank to be ready for emission of assets by means of initial public offering.

An Empirical Investigation of IPO Underpricing and the Change to the LLP Organization of Audit Firms

2004 ◽  
Vol 23 (1) ◽  
pp. 53-67 ◽  
Author(s):  
Steven R. Muzatko ◽  
Karla M. Johnstone ◽  
Brian W. Mayhew ◽  
Larry E. Rittenberg
Keyword(s):  
Initial Public Offering ◽  
Audit Quality ◽  
Limited Liability ◽  
Litigation Risk ◽  
Ipo Underpricing ◽  
Audit Firm ◽  
Legal Structure ◽  
Audit Firms ◽  
Public Offering

This paper examines the relationship between the 1994 change in audit firm legal structure from general partnerships to limited liability partnerships (LLPs) on underpricing in the initial public offering (IPO) market. The change in legal structure of audit firms reduces an audit firm's wealth at risk from litigation damages and reduces the incentives for intrafirm monitoring by partners within an audit firm. Prior research suggests that underpricing protects underwriters from litigation damages, and that the level of underpricing varies inversely with both the amount of implicit insurance provided by the audit firm and the quality of the audit services provided. We hypothesize the change in audit firm legal structure reduced the assets available from audit firms in IPO-related litigation and indirectly reduced audit quality by lowering intrafirm monitoring. As a result, underwriters have incentives as a joint and several defendant with the audit firms to increase IPO underpricing, particularly for high-litigation-risk IPOs, following audit firms' shifts to LLP status. Our findings are consistent with this hypothesis.

scholarly journals Corporate governance and IPO underpricing: evidence from the italian market

2021 ◽  
Author(s):  
Emanuele Teti ◽  
Ilaria Montefusco
Keyword(s):  
Corporate Governance ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Stock Option ◽  
Board Members ◽  
Ipo Underpricing ◽  
Italian Market ◽  
Public Offering ◽  
The Impact ◽  
Positive Effect

AbstractThis paper aims to analyse the impact of firms’ corporate governance characteristics on the degree of first-day returns (i.e., underpricing) in the Italian initial public offering (IPO) market. In particular, this work investigates the impacts of the characteristics of boards of directors (BoDs) and ownership structure on the underpricing of newly offered shares. By studying a sample of 128 Italian IPOs between 2000 and 2016, it is concluded that corporate governance characteristics affect the degree of first-day returns following a company’s IPO. More specifically, the size of the BoD negatively affects underpricing, while the ownership of institutional investors and board members has a positive effect on the degree of underpricing. Conversely, no significant evidence is found with regard to board independence, the number of female directors in the boardroom, the implementation of stock option plans and ownership concentration.

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.

scholarly journals Comparison of the theoretical and practical approaches to funding through the IPO way in the Czech capital market

2008 ◽  
Vol 56 (6) ◽  
pp. 59-68
Author(s):  
Tomáš Meluzín
Keyword(s):  
Initial Public Offering ◽  
Capital Market ◽  
Western Europe ◽  
The United States ◽  
Bank Loans ◽  
Professional Literature ◽  
Mortgage Crisis ◽  
The Usa ◽  
Eastern European Countries ◽  
Public Offering

Funding development of the company through the “Initial Public Offering” has a high representation globally, the Czech Republic unlike, and belongs to traditional methods of raising funds necessary for development of business in the developed capital markets. In the United States of America, Japan and in the Western Europe countries the method of company funding through IPO has been applying for several decades already. The first public stock offerings began to be applied in these markets in higher volumes from the beginning of the 60th of the last century. From that period importance of IPO goes up globally and the initial public stock offerings begin to be applied more and more even in the Central and Eastern European countries. In the conditions of the Czech capital market it is possible to identify only few companies, who attempted to funding through the IPO way at present. Greater part of the Czech companies still undergo the debit funding for financing their further development, namely in the form of bank loans. At the same time it is necessary to take into account, that the debit financing starts, thanks to so-called mortgage crisis in the USA, causing problems and mark up. Admittance of a stakeholder into the company is not convenient for all and thus IPO represents an interesting option of how to acquire a no arrear capital. The aim of this article is to determine the IPO concept, analyse its development at the world stockholder markets, describe the reasons for IPO implementation according to the contemporary professional literature and compare it with the approaches to this particular form of funding with companies that have already implemented IPO at the Czech capital market.

Information Cascades among Investors in Equity Crowdfunding

2018 ◽  
Vol 42 (3) ◽  
pp. 467-497 ◽  
Author(s):  
Silvio Vismara
Keyword(s):  
Social Networks ◽  
Initial Public Offering ◽  
Crucial Role ◽  
Individual Investors ◽  
Information Cascades ◽  
Equity Offerings ◽  
Equity Crowdfunding ◽  
Retail Investors ◽  
Public Offering

Finance studies on information cascades, usually in an initial public offering setting, typically differentiate between institutional and retail investors, as this is the only information available to potential backers. Information available through equity crowdfunding platforms includes details on individual investors as they may disclose information about themselves by linking their profile to social networks or websites. Using a sample of 132 equity offerings on Crowdcube in 2014, we show that information cascades among individual investors play a crucial role in crowdfunding campaigns. Investors with a public profile increase the appeal of the offer among early investors, who in turn attract late investors.

A study of the relationship between employee wage and commercial banks efficiency in China

2016 ◽  
Vol 7 (2) ◽  
pp. 147-159
Author(s):  
Jiangtao Li ◽  
Jianyue Ji ◽  
Yanxia Wang
Keyword(s):  
Commercial Bank ◽  
Commercial Banks ◽  
Calculated Data ◽  
Wage Structure ◽  
Tobit Regression ◽  
Bank Efficiency ◽  
Content Type ◽  
Per Capita ◽  
The Impact ◽  
The Relationship

Purpose Efficiency of a commercial bank affects both its competitiveness and the role it plays in the process of economic development. Although great efforts have been exerted in developing the various aspects of banking efficiency, there seems to be a lack of research on examining the impact of the bank efficiency from the employee wage perspective. The mechanism of how employee wage affects commercial bank efficiency and the relationship between the two were analyzed in this paper. Based on the growing body of research on efficiency in banking, the aim of this paper is to examine if competitiveness of employee wages at any commercial bank has any impact on the bank efficiency score. Design/methodology/approach The method used was quantitative analysis, which was based on comparing the evaluated efficiencies of the banks with employee wages published in the bank reports. The empirical data in this paper were based on 16 Chinese listed commercial banks from 2004 to 2012. The per capita wage of commercial banks was selected as the wage indicator, and the efficiency value obtained by the slack-based measure (SBM) model was selected as the efficiency indicator. According to the calculated data, the Tobit regression model was built to analyze the relationship between employee wage and commercial bank efficiency. Findings The research results show that employee wage is the key variable that influences the efficiency of Chinese commercial banks, and the inverted U-shaped relationship between employee wage and commercial banks efficiency shows up. Practical implications The wage structure data of the composition of basic pay and bonus were not available at the time of conducting the research. Per capita wages were used instead to reflect the employee wage levels of Chinese banks. Originality/value This study can provide some help for the banking industry by analyzing the wage levels from the perspective of efficiency and also further enriches the theoretical system of the relationship between employee wage and bank efficiency.

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