Sponsor ownership and IPO initial return: evidence from Pakistan stock exchange

Purpose The purpose of this paper was to examine whether or not the sponsor lock-up ratio, lock-up period, regulation changes and interaction variable (oversubscription [OSR]) affected initial public offering (IPO) initial return. Design/methodology/approach A complete sample of 111 listed IPOs in Pakistan stock exchange from 1996 to 2018 was incorporated. Based on the cross-section data, this paper estimated using ordinary least square and quantile least square for robustness. In addition to that, this paper estimated the data using stepwise least square to inspect the signalling aspect of the lock-up ratio, lock-up period and regulation changes on IPO initial return. Findings This study showed that the lock-up ratio, lock-up period and regulatory changes had a positive impact on the IPO’s initial return. Furthermore, the assertion of interaction variable (regulation changes × OSR) and (lock-up period × OSR) was a negatively significant factor in influencing the IPO’s initial return. The results of this paper were robust to endogeneity bias. Practical implications The finding of this study proposed that sponsors of IPOs can be a strong signal of risk or quality, which was consistent with the signalling theory prediction. Concurrently, investors must be aware of the total proportions of lock-up ratio so that they can estimate the chances of getting the highest initial return on IPOs. From the regulators’ point of view, it is suggested that the lock-up ratio and the lock-up period should be determined with a deeper understanding and incorporated into the equity guidelines as it is evident that these factors are priced by the market. Originality/value Studies on the effect of sponsors have always been centred on well-recognized firms. Therefore, using the IPO samples listed in Pakistan, this paper contributes to the IPO literature by investigating the lock-up ratio of the sponsor, the lock-up period and the regulatory changes to the initial IPO return. Additionally, OSR has been introduced as an interaction variable among the sponsors’ lock-up period and regulations changes to explain the ongoing IPO initial return phenomenon.

How Adolescents and Adults Learn About Changes in the Trustworthiness of Others Through Dynamic Interaction

Whether to trust or distrust another individual is a complex interpersonal challenge, especially when such individuals behave inconsistently. It is still unclear as to how individuals learn and adapt to fluctuations in the trustworthiness of others and how this process changes from adolescence to adulthood. To address these issues, we implemented repeated rounds of a trust game within the context of a complicated and changeable interpersonal environment. Specifically, adolescents and adults played the role of trustors who had to decide whether to invest money in two anonymous partners carrying the risk of no reciprocation. Unbeknownst to participants, these two partners had different trustworthiness profiles: one partner initially yielded a higher initial return rate (70%) while the other initially yielded a lower initial return rate (30%). Crucially, over repeated rounds, these two partners gradually changed their responses to the point where, finally, return rates were both neutral (50%). Results indicated that all participants showed less updating in the negative direction in response to good-to-neutral partners while more updating in the positive direction in response to the bad-to-neutral partner. Compared to adults, this behavioral disparity in responses to good-to-neutral and bad-to-neutral partners was less pronounced in adolescents. Based on the computational modeling approach, the potential mechanisms underlying their behavioral patterns were revealed: the higher learning rate promoted flexible adaptions in participants to untrustworthy trustees as they changed to neutral. The less pronounced distinction between good-to-neutral and bad-to-neutral partners in adolescents was related to their lower learning rate. Overall, our study extends the understanding of trust behavior to a fluctuating social context and highlights the role of social learning in social emotion and interaction.

Visuals and attention to earnings news on twitter

We propose the visual attention hypothesis that visuals in firm earnings announcements increase attention to the earnings news. We find that visuals in firms’ Twitter earnings announcements are associated with more retweets, consistent with greater user engagement with announcements that have visuals. This result holds for earnings tweets sent by the same firm and on the same day in firm-level and tweet-level analyses. Consistent with managerial opportunism, firms are more likely to use visuals in their earnings tweets when performance is good but less persistent. Consistent with visuals increasin g investor attention, the initial return response to earnings news is stronger and the post-announcement response is lower when visuals are used. Our evidence of a post-announcement return reversal indicates that visuals can be a double-edged sword. Furthermore, the higher earnings response coefficient from visuals is more pronounced on days with high investor distraction (when many other firms are also announcing earnings). Graphical abstract

Analisis Determinan Net Initial Return pada Perusahaan yang Melakukan IPO di Bursa Efek Indonesia

Penelitian ini bertujuan untuk menganalisis dan menguji variabel Current Ratio, Return On Asset, Offering, dan Reputasi Underwriter terhadap tingkat Net Initial Return pada perusahaan yang melakukan IPO di Bursa Efek Indonesia (BEI) periode 2015-2019. Populasi penelitian ini adalah sebanyak 181 perusahaan, dengan sampel sebanyak 108 perusahaan atas pengambilan sampel menggunakan teknik purposive sampling. Penelitian ini menggunakan IBM SPSS 25 sebagai alat analisis. Hasil penelitian menunjukkan bahwa Current Ratio, Return On Asset, Offering, dan Reputasi Underwriter secara simultan berpengaruh signifikan terhadap Net Initial Return. Secara parsial, variabel Current Ratio dan Offering tidak berpengaruh terhadap Net Initial Return serta pada variabel Return On Asset dan Reputasi Underwriter memiliki pengaruh signifikan dengan arah negatif terhadap Net Initial Return.

Shariah-compliance and IPO underpricing: evidence from Pakistan Stock Exchange

Purpose This study aims to investigate the effect of Shariah-compliant status and Shariah regulation on initial public offering (IPO) underpricing in Pakistan. Design/methodology/approach Besides the ordinary least square’s method, this study used quantile least squares as a robust approach and stepwise regression for further analysis to investigate the underpricing phenomenon in Pakistan. Data of 84 IPOs listed on Pakistan Stock Exchange from January 2000 to December 2018 were collected to determine the impact of Shariah-compliant status and Shariah regulation on IPO underpricing. Findings Results of the study show that Shariah-compliant status has a negative relationship but Shariah regulation has a positive relationship with IPO underpricing. Hence, it is contended that Shariah-compliant firms have lower asset volatility and uncertainty than non-Shariah-compliant firms because of less information asymmetry, resulting in lower underpricing. These Shariah-compliant firms provide signals of high-quality IPOs as they must comply with the strict guidelines issued by the Securities Exchange Commission of Pakistan in addition to being considered as amicable by investors. Further, this study suggests that investors are more attracted to Shariah-compliant firms than non-Shariah-compliant ones. Research limitations/implications This study’s offers limited consideration of nonfinancial and financial characteristics that could influence the decision of investors to subscribe to IPOs. Besides, future studies could consider the screening benchmarks; for instance, debt and cash may explain the intensity of IPO initial return in Pakistan. Originality/value The present work empirically investigated the influence of Shariah-compliant status and Shariah regulation on IPO underpricing in Pakistan’s IPO market, which has been scarcely covered in the existing literature.

ANALISIS FAKTOR – FAKTOR YANG MEMPENGARUHI INITIAL RETURN SETELAH IPO DI BURSA EFEK INDONESIA PERIODE 2017-2019

Initial Public Offering is a mechanism in which a company for first time issues new stock and is then offered to the public. The factors affecting the initials return are Return On Asset, Financial Leverage, and Earning Per Share. The problems with this research are (1) What is the development of return on asset, financial leverage, earning per share and initial return on non-financial firms registered in BEI? (2) How does return on asset, financial leverage, and earning per share affect the initials return partially? (3) How does return on asset, financial leverage, and earning per share affect the initials return simultaneously? The purposes of this research are (1) To find out the progression of return on asset, financial leverage, earning per share, and initial return. (2) To know the impact of return on asset, financial leverage, and earning per share toward the initial return partially. (3) To know the impact of return on asset, financial leverage, and earning per share toward the initial return simultaneously. Locus in this research is conducted on a company that did IPO and registered to the Indonesian Stock Exchange in 2017-2019. The number of peoples in this research are 145 companies, and the selection of samples was used by purposive sampling technique to 34 IPO companies listed in the Indonesian Stock Exchange as a research. The method of data analysis used is descriptive and verificative, where it makes classical assumptions and multiple linear regression tests. Simultaneous research reveals that there have been significant effects on initials return. And partial, financial leverage has a positive effect on the initials return. Whereas the return on asset and earning per share have no effect on initials return.

IPO initial return in Pakistan: influence of country-level institutional quality

PurposeThe present study investigated the influence of country-level institutional quality on IPO initial return using World Bank Governance indices.Design/methodology/approachThis study analysed 84 IPOs listed on Pakistan Stock Exchange between 2000 and 2017 using cross-sectional data. The impact of country-level institutional quality on IPO initial returns was examined using ordinary least square, robust least square, stepwise least square and quantile regression.FindingsEmpirically, the values of political stability, government effectiveness and regulatory quality were positively significant, whereas rule of law and control of corruption were negatively significant in explaining the intensity of IPO initial return. The results also show the presence of significant risk in the market. Hence, investors were compensated with higher initial returns for weak country-level institutional quality. The results also reveal that improving country-level institutional quality would improve the financial market transparency, thereby reducing IPO initial returns.Originality/valueNo studies have been conducted regarding the influence of country-level institutional quality on IPO initial return in Pakistan. This study is a pioneering study that seeks to give insights into the link between these variables in the context of Pakistan.

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.

Signalling Effect of Auditor Reputation and Lock-Up Period on Over-Subscription Ratio: Evidence from Malaysian Fixed-Price IPOs

This study investigates the signalling effect of auditor reputation and lock-up period on the subscription demand of investors in the Malaysian IPO market that uses the fixed-price method in pricing IPOs. The study sample covers 420 IPOs listedon Bursa Malaysia from January 2000 to December 2015. The present study employsOrdinary Least Square(OLS)andQuantile Regression(QR)methodsin investigating the signalling effect on over-subscription ratio (OSR). The results indicate that auditor reputation has a negative effect and the lock-up period has a positive effect on OSR. This shows that investors’ demand in Malaysia is driven by capital gain and not by the quality of the listing firm. This is also supported by the control variables, where IPOs with low initial return, high offer price, high institutional involvement, and reputable underwriterhave lower OSR because they have lower initial returns.

PENGARUH MEDIA COVERAGE TERHADAP UNDERPRICING INITIAL PUBLIC OFFERING (IPO) DI BURSA EFEK INDONESIA

Perusahaan membutuhkan sumber dana yang besar untuk mempertahankan eksistensinya. Salah satu cara untuk mendapatkan dana tersebut adalah dengan melakukan IPO. Dalam proses IPO terdapat fenomena underpricing dan overpricing yang salah satunya dipengaruhi oleh peran media. Penelitian ini bertujuan untuk mengetahui pengaruh media coverage terhadap underpricing IPO yang diproxikan dengan initial return saham. Objek penelitian adalah perusahaan yang melakukan IPO di Bursa Efek Indonesia pada kurun 2012-2017. Sebanyak 76 perusahaan dari berbagai industri yang mengalami underpricing IPO yang diperoleh dengan menggunakan metode purposive sampling menjadi sampel penelitian ini. Pengujian hipotesis dilakukan dengan menggunakan analisis regresi linear berganda. Hasil penelitian menunjukkan bahwa media online nasional berpengaruh negative dan tidak signifikan sedangkan media online internasional berpengaruh positif dan tidak signifikan terhadap initial return saham sehingga media coverage tidak berpengaruh terhadap underpricing IPO. Kata Kunci: Media Coverage, Media Online Nasional, Media Online Internasional, dan Underpricing IPO