scholarly journals Redacted disclosure and analysts' weighting of private and public information

2018 ◽  
Author(s):  
◽  
Lei Zhao
Keyword(s):  
Initial Public Offerings ◽  
Private Information ◽  
Public Information ◽  
Information Environment ◽  
Public Offerings ◽  
Proprietary Information ◽  
Fair Disclosure ◽  
Private And Public ◽  
Capital Financing

This paper investigates whether and how redacting proprietary information in regulatory filings affects financial analysts' weighting of private and public information. I examine this issue in the context of initial public offerings (IPO) where firms are allowed to redact value-relevant, proprietary information in relation to material agreements. To the extent that redaction affects firm information environment, I expect redaction to incentivize analysts to overweight their private information relative to public information. As predicted, I find that analysts' overweighting of private information is greater for redacted IPO firms. Moreover, this result prevails particularly when analysts involved rely more on private information. Next, I find analysts' overweighting of private information is more pronounced for analysts who have limited resources, ability, and attention, and when IPO firms do not receive venture capital financing. Finally, I find that the redaction-overweighting relation is attenuated after the passage of Regulation Fair Disclosure. I also find that analysts' overweighting of private information increases redacted IPO firms' idiosyncratic return volatility. Overall, my results extend prior research by examining the role of firm information environment on analysts' decision-making process.

scholarly journals Learning from prices: information aggregation and accumulation in an asset market

2020 ◽  
Author(s):  
Michele Berardi
Keyword(s):  
Private Information ◽  
Dynamic Properties ◽  
Public Information ◽  
Information Aggregation ◽  
Time Varying ◽  
Private Signals ◽  
Private And Public ◽  
Fundamental Value ◽  
Over Time

Abstract Can prices convey information about the fundamental value of an asset? This paper considers this problem in relation to the dynamic properties of the fundamental (whether it is constant or time-varying) and the structure of information available to agents. Risk-averse traders receive two potential signals each period: one exogenous and private and the other, prices, endogenous and public. Prices aggregate private information but include aggregate noise. Information can accumulate over time both through endogenous and exogenous signals. With a constant fundamental, the precision of both private and public cumulative information increases over time but agents put progressively more weight on the endogenous signals, asymptotically disregarding private ones. If the fundamental is time-varying, the use of past private signals complicates the role of prices as a source of information, since it introduces endogenous serial correlation in the price signal and cross-correlation between it and innovations in the fundamental. A modified version of the Kalman filter can still be used to extract information from prices and results show that the precision of the endogenous signals converges to a constant, with both private and public information used at all times.

The Oxford Handbook of IPOs

2018 ◽  
Keyword(s):  
United States ◽  
Initial Public Offerings ◽  
Financial Regulation ◽  
Large Body ◽  
Public Information ◽  
The United States ◽  
Minimum Size ◽  
Stock Exchanges ◽  
Public Offerings ◽  
Firm’S Life Cycle

Firms generally begin as privately owned entities. When they grow large enough, the decision to go public and its consequences are among the most crucial times in a firm’s life cycle. The first time a firm is a reporting issuer gives rise to tremendous responsibilities about disclosing public information and accountability to a wide array of retail shareholders and institutional investors. Initial public offerings (IPOs) offer tremendous opportunities to raise capital. The economic and legal landscape for IPOs has been rapidly evolving across countries. There have been fewer IPOs in the United States in the aftermath of the 2007–2009 financial crisis and associated regulatory reforms that began in 2002. In 1980–2000, an average of 310 firms went public every year, while in 2001–2014 an average of 110 firms went public every year. At the same time, there are so many firms that seek an IPO in China that there has been a massive waiting list of hundreds of firms in recent years. Some countries are promoting small junior stock exchanges to go public early, and even crowdfunding to avoid any prospectus disclosure. Financial regulation of analysts and investment banks has been evolving in ways that drastically impact the economics of going public—in some countries, such as the United States, drastically increasing the minimum size of a company before it can expect to go public. This Handbook not only systematically and comprehensively consolidates a large body of literature on IPOs, but provides a foundation for future debates and inquiry.

The role of mandatory lockup ratios in initial public offerings

2021 ◽  
Author(s):  
Rasidah Mohd‐Rashid ◽  
Ruzita Abdul‐Rahim ◽  
Karren Lee‐Hwei Khaw ◽  
Waqas Mehmood
Keyword(s):  
Initial Public Offerings ◽  
Public Offerings

scholarly journals Role Of Underwriters In Restraining Earnings Management In Initial Public Offerings

2012 ◽  
Vol 28 (4) ◽  
pp. 709 ◽  
Author(s):  
Hei Wai Lee ◽  
Yan Alice Xie ◽  
Jian Zhou
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
The Internet ◽  
Venture Capitalists ◽  
Font Size ◽  
Going Public ◽  
Public Offerings ◽  
Investment Bankers ◽  
Sarbanes Oxley

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify; mso-pagination: none;" class="MsoNormal"><span style="font-family: Times New Roman;"><span style="font-size: 10pt;">We investigate the </span><span style="font-size: 10pt; mso-fareast-language: ZH-CN;">relationship</span><span style="font-size: 10pt;"> between underwriter</span><span style="font-size: 10pt; mso-fareast-language: ZH-CN;"> reputation</span><span style="font-size: 10pt;"> and earnings management of IPO firms over the period of 1991-2005. We find that </span><span style="font-size: 10pt; mso-fareast-language: ZH-CN;">IPO firms engage in less earnings management</span><span style="font-size: 10pt;"> if </span><span style="font-size: 10pt; mso-fareast-language: ZH-CN;">they</span><span style="font-size: 10pt;"> are underwritten by prestigious investment bankers. Furthermore, the role of prestigious underwriters in restraining earnings management of IPO issuers do not change during the Internet Bubble period or after the passage of the Sarbanes-Oxley Act (SOX). The findings support the certification role of underwriters in the IPO process.<span style="mso-spacerun: yes;"> </span>We also document that</span><span style="font-size: 10pt; mso-fareast-language: ZH-CN;"> firms going public in the post-SOX period engage in less earnings management compared to firms going public in the pre-SOX period</span><span style="font-size: 10pt;">. Further findings suggest that the changing objectives of venture capitalists may explain the reduction in the level of earnings management of IPO firms following the passage of SOX.</span></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

Die Fehlbewertung junger Aktiengesellschaften beim Gang an die Börse – Ursachen und wirtschaftspolitische Konsequenzen

2003 ◽  
Vol 52 (1) ◽  
Author(s):  
Christine Ploog ◽  
Michael Stolpe
Keyword(s):  
Market Power ◽  
Initial Public Offerings ◽  
Investment Banks ◽  
Policy Options ◽  
Public Offerings ◽  
Speculative Bubbles ◽  
Privatisation Programme ◽  
Welfare Implications

AbstractThis paper discusses policy options to reduce underpricing in initial public offerings (IPOs). It surveys recent theoretical insights into the causes and welfare implications of underpricing and reviews evidence on the signalling hypothesis, the winner’s curse model, the role of underwriters in assessing issuing firms’ future profitability and the genesis of speculative bubbles in IPO markets. The paper concludes that governments should curtail the abuse of market power in underwriting by prohibiting the allocation of shares to insiders and by reducing the incentives for investment banks to exploit underpriced share issues in order to cross-subsidise unrelated lines of business. Moreover, governments should seek to stabilize the IPO market by committing themselves to regular equal-sized issues of shares in government assets as part of a long-term privatisation programme.

The Role of the Media in the Internet IPO Bubble

2009 ◽  
Vol 44 (3) ◽  
pp. 657-682 ◽  
Author(s):  
Utpal Bhattacharya ◽  
Neal Galpin ◽  
Rina Ray ◽  
Xiaoyun Yu
Keyword(s):  
Initial Public Offerings ◽  
Good News ◽  
News Item ◽  
The Internet ◽  
Public Offerings ◽  
Share Prices ◽  
Dramatic Rise ◽  
The Media ◽  
Media Hype

AbstractWe read all news items that came out between 1996 and 2000 on 458 Internet initial public offerings (IPOs) and a matching sample of 458 non-Internet IPOs (a total of 171,488 news items) and classify each news item as good news, neutral news, or bad news. We first document that the media were more positive for Internet IPOs in the period of the dramatic rise in share prices and more negative for Internet IPOs in the period of the dramatic fall in share prices. We then document that media hype is unable to explain the Internet bubble: A 1,646% difference exists in returns between Internet stocks and non-Internet stocks from January 1, 1997, through March 24, 2000 (the market peak), and the media can explain only 2.9% of that.

The control-ownership wedge and the survival of French IPOs

2018 ◽  
Vol 19 (2) ◽  
pp. 271-294 ◽  
Author(s):  
Imen Derouiche ◽  
Syrine Sassi ◽  
Narjess Toumi
Keyword(s):  
Survival Time ◽  
Initial Public Offerings ◽  
Failure Time ◽  
Vote Rule ◽  
Agency Conflicts ◽  
Content Type ◽  
Controlling Shareholders ◽  
Public Offerings ◽  
The One

Purpose The purpose of this paper is to investigate the effect of the control-ownership wedge of controlling shareholders (excess control) on the survival of French initial public offerings (IPOs). Design/methodology/approach This paper studies a large sample of 434 French IPOs. The empirical analysis uses the Cox proportional hazard and accelerated-failure-time models. Data are manually gathered from IPO prospectuses. Findings The findings support a positive relation between the control-ownership wedge and IPO survival time, indicating that survival is more likely in firms with high excess control levels. This result is consistent with the view that controlling shareholders with a large control-ownership wedge have incentives to preserve their private benefits of control by increasing firm survival chances. The findings also show that older IPOs are more likely to survive, while riskier and underpriced IPOs are more likely to delist. Practical implications The results provide a better understanding of the role of excess control in IPO survival. They also enrich the debate on the efficiency of the one-share-one-vote rule. Originality/value The research provides new insights into the role of agency conflicts in IPO survivability. In particular, it explores the effect of dominant shareholders with a control-ownership wedge on survival time.

The Role of Lockups in Initial Public Offerings

2003 ◽  
Vol 16 (1) ◽  
pp. 1-29 ◽  
Author(s):  
Alon Brav ◽  
Paul A. Gompers
Keyword(s):  
Initial Public Offerings ◽  
Public Offerings
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