scholarly journals Choice between Acquisition and Joint Venture Based on Financial Statement Comparability

2021 ◽  
Vol 13 (11) ◽  
pp. 6218
Author(s):  
Heein Yi ◽  
Sangsoo Kim ◽  
SeungHun Han
Keyword(s):  
Information Asymmetry ◽  
Initial Public Offering ◽  
Joint Venture ◽  
Investment Strategy ◽  
Financial Statement ◽  
Experimental Setting ◽  
Target Firms ◽  
Public Offering ◽  
Accounting Comparability ◽  
The Impact

This study examined the relationship between target firms’ financial statement comparability and bidder firms’ boundary decisions. The study used initial public offering (IPO) firms as target firms to test the impact of asymmetric information and signaling on investing bidder firms’ boundary decisions, such as joint ventures or acquisitions. In the IPO market, as an experimental setting, bidder firms are unfamiliar with issuing firms because they have little information about them prior to the IPO. This study argues that IPO firms with higher accounting comparability show lower information asymmetry. Consistent with this argument, we found that IPO firms’ accounting comparability has a positive probability of becoming a target for either a joint venture or acquisition, or an acquisition instead of a joint venture. This study contributes to the literature, financial statement comparability, and joint venture and acquisition decisions to measure the degree to which information asymmetry affects corporate investment strategy using a unique experimental setting of IPO firms.

The impact of different forms of IPO firm legitimacy on the choice of alliance governance structure

2012 ◽  
Vol 18 (4) ◽  
pp. 516-536 ◽  
Author(s):  
Joseph E Coombs ◽  
Paul E Bierly ◽  
Scott Gallagher
Keyword(s):  
Initial Public Offering ◽  
Joint Venture ◽  
Local Community ◽  
Governance Structure ◽  
Business Press ◽  
Biotechnology Firms ◽  
Hierarchical Governance ◽  
Public Offering ◽  
The Impact ◽  
Alliance Governance

AbstractWe analyze the effects of four different types of firm legitimacy – managerial, technological, local community legitimacy and business press endorsement – on the choice of alliance governance structure in partnerships with newly public biotechnology firms. We expand current research to differentiate between non-equity, minority equity and joint venture alliance structures. We find that initial public offering of stock (IPO) firms with higher levels of managerial legitimacy and local community legitimacy are more likely to enter into joint ventures than minority equity alliances and non-equity alliances. IPO firms with higher technological legitimacy and business press endorsement are more likely to use a less hierarchical governance structure.

The impact of different forms of IPO firm legitimacy on the choice of alliance governance structure

2012 ◽  
Vol 18 (4) ◽  
pp. 516-536 ◽  
Author(s):  
Joseph E Coombs ◽  
Paul E Bierly ◽  
Scott Gallagher
Keyword(s):  
Initial Public Offering ◽  
Joint Venture ◽  
Local Community ◽  
Governance Structure ◽  
Business Press ◽  
Biotechnology Firms ◽  
Hierarchical Governance ◽  
Public Offering ◽  
The Impact ◽  
Alliance Governance

AbstractWe analyze the effects of four different types of firm legitimacy – managerial, technological, local community legitimacy and business press endorsement – on the choice of alliance governance structure in partnerships with newly public biotechnology firms. We expand current research to differentiate between non-equity, minority equity and joint venture alliance structures. We find that initial public offering of stock (IPO) firms with higher levels of managerial legitimacy and local community legitimacy are more likely to enter into joint ventures than minority equity alliances and non-equity alliances. IPO firms with higher technological legitimacy and business press endorsement are more likely to use a less hierarchical governance structure.

scholarly journals Evidence of the Italian special purpose acquisition company

2019 ◽  
Vol 16 (4) ◽  
pp. 66-76
Author(s):  
Patrizia Riva ◽  
Roberta Provasi
Keyword(s):  
Initial Public Offering ◽  
Law Firm ◽  
Italian Market ◽  
Target Firms ◽  
Before And After ◽  
New Type ◽  
Business Combination ◽  
Public Offering ◽  
The Right ◽  
The Impact

In 1992 David Nussbaum with the support of the law firm Graubard Miller devised the formula of the specified purpose acquisition companies (SPAC): a financial vehicle that has the flexibility and functionality typical of the blank-check companies, which could provide investors with the right protections and guarantees in order to be a reliable instrument. The first SPAC officially debuted in 2003 through the Initial Public Offering (IPO) of Millstream Acquisition Corporation which then completed the merger with Nations Health in September 2004. In 2005 the first SPAC got listed in European Market and in 2011 the first SPAC joined in the Italian market. The aim of this research is to investigate the features of the Italian SPACs System because it’s becoming a large phenomenon in Italy. This new type of investment is able to fit the needs of small-medium Italian companies, to solve crisis difficulties, to find new finance to grow, to be a good instrument for opening up venture capital and institutional investors respecting the past business history and the safeguard of corporate control. The study, then, performs an analysis on the Italian SPACs by examining their target firms, stock performance before and after the business combination and the impact of the SPACs on SME corporate governance models. These results will be compared with those of other research developed by academic literature.

scholarly journals UNDERWRITER REPUTATION, INTELLECTUAL CAPITAL DISCLOSURE, AND UNDERPRICING

2017 ◽  
Vol 18 (2) ◽  
Author(s):  
Wahyu Widarjo ◽  
Rahmawati Rahmawati ◽  
Bandi Bandi ◽  
Ari Kuncara Widagd
Keyword(s):  
Information Asymmetry ◽  
Initial Public Offering ◽  
Intellectual Capital ◽  
Trading Volume ◽  
Measurement Method ◽  
Trading Frequency ◽  
Underwriter Reputation ◽  
Public Offering ◽  
The Impact

This study examines the effect of underwriter reputation on the intellectual capital disclosure extent and the impact of intellectual capital disclosure on underpricing. We developed a measurement method of underwriter reputation by using three indicators, i.e. trading volume, trading value, and trading frequency. Moreover, we also developed an intellectual capital disclosure index which is apropriate with Indonesian regulation. The testing result of 221 firms which conducted initial public offering in 2000-2014 showed that the underwriter reputation is the determinant of intellectual capital disclosure. We also found that intellectual capital disclosure affected underpricing negatively. Those findings indicate that intellectual capital disclosure extent may reduce information asymmetry, so as to assist potential investors in assessing the quality and prospect of a firm in the future.Keywords: Underwriter Reputation; Intellectual Capital Disclosure; Underpricing.

Pengaruh Reputasi Underwriter, Umur Perusahaan, dan Persentase Penawaran Saham 53 kepada Publik terhadap Underpricing

2016 ◽  
Vol 8 (1) ◽  
pp. 53-74
Author(s):  
Maria Jeanne ◽  
Chermian Eforis
Keyword(s):  
Initial Public Offering ◽  
Stock Price ◽  
Stock Exchange ◽  
Secondary Data ◽  
Secondary Market ◽  
Financial Statement ◽  
Data Set ◽  
Multiple Regression Method ◽  
Underwriter Reputation ◽  
Public Offering

The objective of this research is to obtain empirical evidence about the effect of underwriter reputation, company age, and the percentage of share’s offering to public toward underpricing. Underpricing is a phenomenon in which the current stock price initial public offering (IPO) was lower than the closing price of shares in the secondary market during the first day. Sample in this research was selected by using purposive sampling method and the secondary data used in this research was analyzed by using multiple regression method. The samples in this research were 72 companies conducting initial public offering (IPO) at the Indonesian Stock Exchange in the period January 2010 - December 2014; perform initial offering of shares; suffered underpricing; has a complete data set forth in the company's prospectus, IDX monthly statistics, financial statement and stock price site (e-bursa); and use Rupiah currency. Results of this research were (1) underwriter reputation significantly effect on underpricing; (2) company age do not effect on underpricing; and (3) the percentage of share’s offering to public do not effect on undepricing. Keywords: company age, the percentage of share’s offering to public, underpricing, underwriter reputation.

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 An empirical study of IPO underpricing: Evidence from Chinese stock market

2014 ◽  
Vol 12 (1) ◽  
pp. 139-152 ◽  
Author(s):  
Tianxiang Xu ◽  
Yujie Zhao
Keyword(s):  
Empirical Study ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Chinese Stock Market ◽  
Short Term ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Public Offering ◽  
Different Characteristics

Initial public offerings, as one of the most important activities for firms, have raising massive amount of researches. Regarding China, the stock markets are experiencing a massive level of IPO underpricing, which leads to trillions of dollars leaved on the table. This study is conducted for the question why Chinese IPO are so heavily underpriced and the determinants of IPO underpricing, also the possibility of IPO be underpriced in China. We confirm again that Chinese IPOs are heavily underpriced and the average underpricing level is about 110%. Further, Chinese IPO will experience a negative short term return starting from 10 days after listing, and there are significantly different characteristics for state owned IPOs and private IPOs. This study finds that information asymmetry, proportion of state owned share and risk are the mainly determinants of IPO underpricing in China. Additionally, one of the biggest reason that Chinese initial public offering is underpriced so much is because of government participation, since we find that firms with larger proportion of government state owned shares will be more underpriced.

scholarly journals The Impact of Financial Statement Comparability on Earnings Management: Evidence from Frontier Markets

2020 ◽  
Vol 8 (4) ◽  
pp. 73
Author(s):  
Wil Martens ◽  
Prem W. S. Yapa ◽  
Maryam Safari
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Common Law ◽  
Accounting Standards ◽  
Real Earnings Management ◽  
Financial Statement ◽  
Financial Reporting Standards ◽  
Developed Markets ◽  
Accounting Comparability ◽  
The Impact

This paper examined whether financial statement comparability constrains opportunistic earnings management in frontier market countries. Using a large sample of 19 frontier market countries, and an accounting comparability method that maps comparability across several accounting standards, the results show that enhanced financial comparability constrains accruals earnings management (AEM). Contrary to developed markets and novel to this study, a significant relationship between financial comparability and real earnings management (REM) was not found. For greater robustness, AEM and REM were also tested on both International Financial Reporting Standards (IFRS) adopting and non-adopting countries. The results suggest IFRS adoption constrains AEM, yet exhibited no impact on constraining REM. Additionally, the use of BigN auditors failed to conclusively show an ability to moderate EM. When combined, the results suggest that frontier markets engage in less REM than expected. It is also noted that the legal roots (civil vs. common law) play a significant role in constraining earnings management. Common law countries exhibited lower AEM when comparability increased; this significance was not found in countries that were rooted in civil law. Contributions from this study show that findings from developed markets cannot be generalised to frontier markets.

scholarly journals Does Leverage Constrain Real and AEM Around IPO Corporate Event? Evidence from the Emerging Market

2019 ◽  
Vol 20 (2) ◽  
pp. 354-367
Author(s):  
Sani Hussaini Kalgo ◽  
Bany-Ariffin A.N. ◽  
Hairul Suhaimi Bin Nahar ◽  
Bolaji Tunde Matemilola
Keyword(s):  
Earnings Management ◽  
Initial Public Offering ◽  
Emerging Market ◽  
Order Theory ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Cross Sectional ◽  
Pecking Order Theory ◽  
Public Offering ◽  
The Impact

The article investigates whether Malaysian initial public offering (IPO) firms engage in real and accrual earnings management (AEM) and examines the impact of leverage on the earnings management’s discretionary behaviour of the firms for the period of 2003–2013. The Dechow, Sloan, and Sweeney (1995, The Accounting Review, 70[2], 193–225) cross-sectional modified Jones model was used to estimate discretionary accruals, while Roychowdhury’s (2006, Journal of Accounting and Economics, 42[3]), 335–370) cross-sectional models were used to investigate abnormal real activity discretionary behaviour. The results indicate Malaysian IPO firms engage in real and accrual discretionary behaviour. The graphical presentations of the earnings’ management proxies indicate higher real and AEM for high-leverage firms. Similarly, the multivariate analysis indicates a positive relationship between leverage and earnings management, which is in tandem with the agency cost of free cash flow theory and debt hypothesis. It is also consistent with the pecking-order theory of capital structure. This study suggests that regulatory agencies and standard setters should continue to improve quality of accounting reports in order to protect investors’ invested capital.

Sign in / Sign up

Export Citation Format

Share Document