Pricing Mechanism and IPO Initial Return: Evidence from Pakistan Stock Exchange

This study adds to the extent of the literature by examining the impacts of pricing mechanism and premium offered on IPO initial return in Pakistan. Cross-sectional data were gathered using 90 listed IPOs retrieved from Pakistan stock exchange. Accordingly, ordinary least squares, quantile regression, robustness regression, and stepwise regression were employed to assess the factors that influenced initial return. This study describes the intensity of initial return in light of company specific and issue specific variables. Both closing and opening prices to offer price were incorporated to measure the initial return on the initial day of trading. The outcomes showed that after the reform of book building pricing mechanism, the initial return of IPOs increased, when compared to the fixed price offerings in Pakistan. This study concludes that information from book building pricing mechanism and premium had influenced both issuer and investor in subscribing IPO.

Recasting Roles

Chapter Six explains how people who work in war zones can learn from the success stories presented throughout the book. Building on the stories of remarkable individuals and organizations from various parts of the world, it offers concrete ideas that can inspire readers and give them models to follow. The chapter first identifies the main characteristics of effective peacebuilders (whether donors, diplomats, United Nations peacekeepers, non-governmental organization staff members, or grassroots activists), and explains how outsiders can best help host populations resolve conflicts. It then recognizes the need for international involvement, emphasizing the value that foreigners have as outsiders in conflict zones while acknowledging the challenges that their presence poses, and discussing the benefits and limitations of relying on local elites and ordinary citizens. Throughout, this chapter advocates for a different, more effective approach to building peace—both from the bottom up and from the top down.

The artistic structure of A.I. Solzhenitsyn’s novel “In the first circle”: principles of organization

The work is devoted to the study of artistic structure specificity of A.I. Solzhenitsyn’s novel “In the First Circle”. We focus on the elements analysis of “circular book building” and parallel plot lines, typology of characters-antipodes. We consider in detail, from the formal-content point of view, the “heading complex” of the novel: title, author’s preamble, dedication, double list of contents. We clarify the semantics of the title variants and the final title of novel. We define the main levels of plot-compositional parallelism. We identify the peculiarities of narrative temporal organization, covering three New Year’s Eve days. We analyze artistic details that help create con-trasting situations. We can trace several cross-cutting motives in the description of the fate of dif-ferent characters. We designate the intersection of storylines affecting the work, love, interpersonal relationships of the characters. We draw parallels between the individual structural elements of the novel, which form the compositional “circular book building” given by the title formula. We define pairs of ideologically and behaviorally similar characters, characters-antipodes and the principles of their typology. We show the importance of parallel elements to create a coherent piece of art. We conclude that the artistic means and techniques used by the writer are directly related to the social and artistic practice of research and embodiment of the Russian national character as the main vector of A.I. Solzhenitsyn’s work.

Assessing Need and Level of Agreement among Market Participants in Adopting Book Building Pricing in Nepal

This paper aims at assessing the need of book building pricing of IPOs as well as the level of agreement among market participants on its application in the context of Nepal. This study is based on a cross-sectional analysis of survey data of 71 respondents comprising 19 issue managers, 16 portfolio managers, six share registrars, 10 mutual funds, nine stock brokers and 11 retail investors, for the months of January and February 2020. Mainly, descriptive statistics and inferential statistics like one-way ANOVA have been used in the study to assess the need and level of agreement in adopting book building pricing. The study revealed that there is an urgent need of adopting book building mechanisms of IPO pricing in Nepal because the existing primary market is inefficient and there is a huge wealth loss of existing shareholders in terms of higher underpricing on equity offerings. The role of institutional investors followed by underwriters is found crucial especially to discover price band and final price i.e. cut-off price, of offerings under book building. Further, the level of agreement in adopting book building pricing in Nepal’s capital market is positive because (i) the price band is determined with the active support of qualified institutional investors, (ii) it lowers the degree of underpricing of IPOs than that of par value method, and (iii) book building help prevents „random free riders‟ from overwhelming the process of IPOs. Mainly, more active market participants, like issue managers, portfolio managers, and stockbrokers, have a high level of agreement in adopting book building pricing. The study findings associated with book building pricing are crucial and highly applicable in order to formulate policies and implementation of new pricing mechanism in Nepal. Implementation of book building pricing will contribute to reduce level of underpricing, attract real sector companies and/or foster the primary market efficiency in future.

Book building and its application in offering shares of equitized State-owned enterprises in Viet Nam

Equitization and divestment continue to be one of the crucial pillars of the economic development strategy over the period 2020-2030. The Vietnamese Government has been completing the legal framework to speed up the process of privatization and divestment over the past 3 years. One of the highlights is the regulation on the application of Book Building (BB) Method to offer state shares in 2018. BB, an effective mechanism to determine the price on the primary market, is encouraged to apply on most markets. However, according to Hanoi Stock Exchange, for four months since Circular 21/2019/BTC-TT was released, 17 announcements of IPOs or divesture of state capital were whole lot sale auction or competitive offering. This implies the popularity of fixed price and discriminatory auction in Vietnam. Moreover, applying BB in Vietnam requires certain adjustments to theories. This paper presents the advantages and disadvantages of BB over fixed price and auction, reviews BB experiences of some economies, and make recommendations on the application of BB in offering state shares in Vietnam. Given that BB is expected to create a transparent and effective pricing mechanism and enhance the success of state share offering, this study indicates some points that need clarifying or adjusting to the current regulation, including (i) initial price and price range; (ii) time for disclosing information and opening order books; (iii) objectives of BB; (iv) cancel the results of BB; (v) selection of underwriters.

Towards an Optimal IPO Mechanism

Concerns about the negative consequences of the excessive underpricing of the current arrangement in the initial public offering (IPO) market for the provision of entrepreneurial finance—book building—have led to research into the viability of auctions for IPO pricing and allocation. IPO firms face a trade-off between the benefit of accurate and reliable IPO price discovery and the cost of underpricing. The main aim of this paper was to gain new scientific knowledge about this trade-off by measuring the impact of two key variables on this trade-off: capacity restraint and discount on the auction clearing price. Using controlled experiment methodology in multi-unit uniform price auctions we found that the most capacity-restricted auctions that also offer investors a discount are likely to produce the most accurate and reliable price discovery and consequently, the most predictable auction outcome. There are indications that a discount of 8% may suffice to incentivize investors to reliably contribute to price discovery. The resulting underpricing (and its variability) of these auctions is likely to be significantly lower than if book building would be used to price and allocate IPOs. Technological innovation in the IPO market through the application of recent advances in data science, experimental economics and artificial intelligence allows for the optimization of IPO mechanisms and crowdfunding platforms which in turn improves the access to equity required for entrepreneurial finance.