scholarly journals The Impact of Initial Public Offerings on Firms’ Performance: Disentangling Treatment from Self-Selection Effects

2021 ◽  
pp. 1-33
Author(s):  
Dario Salerno
Keyword(s):  
Selection Bias ◽  
Initial Public Offerings ◽  
Jel Classification ◽  
Stock Exchanges ◽  
Private Firms ◽  
Going Public ◽  
Equity Issues ◽  
Public Offerings ◽  
Endogenous Selection ◽  
The Impact

Using a unique sample of privately held and firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, we investigate the IPO’s impact on the firms’ performance after correcting for endogenous selection and by disentangling equity issues effects from other effects. We find that companies that are going public are more profitable than their matched private firms, while they experience a decrease in profitability over the post-IPO period. These results are resilient to different empirical strategies that address selection bias. Second, after disentangling equity issues effects from other effects, we observe a continuous decline in firms’ profitability in each individual year following the IPO year. JEL classification numbers: G10, G30, G32, L25. Keywords: IPOs, Private firms, Profitability, Selection bias.

scholarly journals Do Private Firms Outperform SOE Firms after Going Public in China Given their Different Governance Characteristics?

2013 ◽  
Vol 15 (2) ◽  
pp. 133 ◽  
Author(s):  
Shenghui Tong ◽  
Eddy Junarsin
Keyword(s):  
Initial Public Offerings ◽  
Early Years ◽  
Private Firms ◽  
Board Structure ◽  
Business Practices ◽  
Business Climate ◽  
Going Public ◽  
Public Offerings ◽  
Listed Firms ◽  
The Government

This study examines the characteristics of board structure that affect Chinese public firm’s financial performance. Using a sample of 871 firms with 699 observations of previously private firms and 1,914 observations of previously state-owned enterprise (SOE) firms, we investigate the differences in corporate governance between publicly listed firms that used to be pure private firms before going public and listed firms that used to be SOEs before their initial public offerings (IPOs). Our main finding is that previously private firms outperform previously SOE firms in China after IPOs. In the wake of becoming listed firms, previously SOE firms might be faced with difficulties adjusting to professional business practices to build and extend competitive advantages. In addition, favorable policies and assistance from the government to the SOE firms might have triggered complacency, especially in early years after getting listed. On the other hand, professional savvy and acumen, combined with efficiency and favorable business climate created by the government have probably led the previously private firms to improve their values stronger and faster.          

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.

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.

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>

scholarly journals An Empirical Analysis for Abnormal Returns from Initial Public Offerings (IPOs): evidence of Iranian oil and chemical industries

2013 ◽  
Vol 3 (1) ◽  
pp. 143 ◽  
Author(s):  
Mahdi Filsaraei ◽  
Alireza Azarberahman ◽  
Jalal Azarberahman
Keyword(s):  
Initial Public Offerings ◽  
Capital Market ◽  
Abnormal Return ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Going Public ◽  
Significance Level ◽  
Public Offerings ◽  
Positive Abnormal Return ◽  
Chemical Companies

Purpose: The core purpose of this paper empirically study of the initial public offerings (IPOs) of companies accepted in oil and chemical industries. The paper attempts to answer the question of is there any abnormal return from IPOs in listed companies in Tehran Stock Exchange (TSE).Design/methodology/approach: This research is an applied research, and its design is empirical, which is done by the method of post-event (past information). For the purpose of the study the t-statistic, regression and variance analyses are applied to examine the hypotheses. We use in the analyses a sample of 29 newly accepted Iranian oil and chemical companies listed on TSE for the period of 2001 to 2012. This paper has studied abnormal return and three abnormal phenomena have been considered in capital market. These phenomena consist: (1) underpricing or overpricing of the firm's stock, (2) lower or higher stock return of the firms and (3) Particular period in market for stock transactions volume.Findings: The results support the hypothesis that there is a positive abnormal return to investing in the newly accepted oil and chemical firms for stockholders. It also shown the firm size is the only factor that can affect the stock abnormal return. With considering significance level, investors have to give attention sequentially to other variables such as stock ownership centralization, going public time and stock offering volume.

Stage financing and syndication in the IPO underpricing of venture-backed firms: Venture capital and IPO underpricing

2019 ◽  
Vol 20 (4) ◽  
pp. 289-300 ◽  
Author(s):  
Awounou-N’dri Honorine ◽  
Dubocage Emmanuelle
Keyword(s):  
Venture Capital ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Capital Investment ◽  
Ipo Underpricing ◽  
Data Set ◽  
Public Offerings ◽  
Venture Capital Investment ◽  
Ipo Performance ◽  
The Impact

The article investigates the impact of stage financing and syndication practices on the underpricing level of venture-backed firms (VBFs) undertaking their initial public offerings (IPOs). This empirical study uses a unique hand-collected data set concerning more than 260 VBFs that went public on Euronext Paris and Alternext between 1997 and 2013. Our findings suggest a lower level of underpricing for firms backed by syndicated venture capital investment. Additionally, we find that the syndicate size is negatively associated with the level of underpricing. However, there is no evidence that stage financing has a significant impact. Syndication thus appears to be the only relevant mechanism to improve IPO performance (measured by the underpricing level), as it reduces agency costs and information asymmetry between the different stakeholders in an IPO process.

Initial public offerings and air pollution: evidence from China

2015 ◽  
Vol 9 (1) ◽  
pp. 99-114 ◽  
Author(s):  
Yan Luo ◽  
Xiaolin Qian ◽  
Jinjuan Ren
Keyword(s):  
Air Pollution ◽  
Corporate Governance ◽  
Initial Public Offerings ◽  
Ambient Air ◽  
Environmental Conservation ◽  
Policy Implications ◽  
Chinese Government ◽  
Content Type ◽  
Public Offerings ◽  
The Impact

Purpose – The purpose of this study is to investigate the impact of firms’ financing activities on the environment. Faced with a deteriorating global environment, both corporations and regulatory bodies have become more responsive to environmental conservation problems. However, existing literature has not adequately addressed the question of whether and how firms’ business activities influence the environment. Design/methodology/approach – Using the daily air pollution indices of 120 Chinese cities from 2001 to 2012, this study found that air pollution is alleviated after firms’ initial public offerings (IPOs). This paper proposes that firms’ IPOs influence the ambient air pollution through three channels: production scale, technical reform and corporate governance effects. Findings – The authors of this study found that the proceeds acquired in IPOs result in enlarged production scales that increase pollution, while the investment of these proceeds in social responsibility-related technical reform and enhanced corporate governance reduce pollution. Moreover, the authors discover that firms with a higher state ownership emit fewer pollutants, thus supporting the positive monitoring role of the Chinese government. Originality/value – Although this study investigates the impact of IPOs on air quality in China, the proposed analytical framework also applies to studies of other financing activities in global markets. This study has important policy implications for government regulations in environmental controls.

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