A COMPARISON OF UNDERWRITER REPUTATION MEASUREMENT METHODS IN EXPLAINING IPO STOCK PERFORMANCE

This study objective compares the underwriter reputation, measured by a different method, in explaining Initial Public Offering (IPO) performance. The reputation is measured based on underwriter IPO frequency and deal value. The underwriter's reputation is then ranked and categorized into quartiles. We use cross-section regression methods to test the effect of different underwriter reputation measurement methods on IPO performance. The dependent variable is short-term and long-term IPO performance. The independent variable is four underwriter reputation categories represented by three-level dummy variables. We found that only underwriter reputation measured by IPO frequency can explain IPO performance. The findings suggest IPO frequency help underwriter understand the market condition and value IPO more accurately. Firms that want to reduce the cost of IPO underpricing should choose underwriters with a higher IPO frequency.

Impact of risk disclosures on IPO performance: Evidence from India

The main aim of the paper is to explore the performance of Indian IPOs in the context of risk disclosures in the offer documents. For the purpose of assessing the impact of risk disclosure factors on initial returns, subsequent returns and post issue risk of IPOs, the study has implemented ordinary least square regression. The study has analysed 109 IPOs that were listed in two main Indian stock exchanges (BSE and NSE) from 2015–2019. Outcomes of the present study are contrary to the previous studies which showed that information disclosure reduces the asymmetry, which is touted as the main reason for underpricing, the present study did not find any association between risk disclosures and underpricing. Quantitative risk measures showed positive association with 1-year returns, but qualitative measures failed to show any association. The post issue risk of the firms showed positive association with external risk factors listed in prospectus and negative association with liquidity. The results of this study are useful for the investors as based on the results they can make decisions about investing in Indian IPOs. Besides, the managers of issuing companies and lead managers of issues can use the results of this study to improve the pricing of issues. To the best of the authors’ knowledge no study has been done before in the Indian context which is specific to risk disclosures (quantitative and qualitative measures) and IPO performance. The present study seeks to fill this gap and contribute to the existing literature.

The impact of media sentiments on IPO underpricing

Purpose In initial public offerings (IPOs), the media plays a pivotal role by disseminating the information to the investors who generally lack the expertise to understand the information through the prospectus. Thus, media coverage can impact the investment decision of the investors and the IPO performance. Media typically covers the IPO before listing, suggesting that it may play an important role in explaining the opening price rather than the closing price on the day of listing. Therefore, this study aims to disaggregate the traditional IPO underpricing into three categories: voluntary, pre-market and post-market and provides a comparative analysis of the media sentiments impact on the traditional and disaggregated IPO underpricing. The authors’ disaggregated IPO underpricing analysis will facilitate the investors in making an effective investment strategy based on media sentiments. Design/methodology/approach The study deploys sentiment analysis using bags of n (2) grams approach to gauge the sentiments on 2,891 media articles and uses “robust-regression” technique to analyze them on a sample of 222 Indian IPOs during 2009–2018. Findings The study reports that the sentiment score is positively related to the traditional underpricing; the sentiment score is positively associated with the pre-market underpricing and does not have any significant relationship with the post-market underpricing; the number of media articles does not play a significant role in explaining the IPO underpricing. The findings highlight the presence of a semi-strong form of efficiency in the Indian IPO market. Originality/value Existing literature focuses that the role of media on IPO performance is based on the developed countries. IPO laws differ based on the countries. For instance, in India, investors can check the demand by the other categories of investors on a real-time basis. Thus, it is interesting to study whether, with such a high level of transparency, media can explain IPO performance in the Indian market. Media generally covers IPO before listing; therefore, the present study disaggregates the IPO underpricing to evaluate the role of media on the primary and secondary market separately. It will help the investors to decide when to enter and exit the market.

Moderating Effects of Founders’ Role on the Influence of Internationalization on IPO Performance of Listed Companies in Thailand

Previous research suggests that internationalization affects initial public offering (IPO) performance in the short term, but it less is known about the founders’ role in the relationship between internationalization and IPO performance. The objectives of this study were to investigate moderating effects of the founders’ role on the impact of internationalization on IPO performance of newly listed companies. The samples included 80 international firms listed in Thailand stock markets from 2013 to 2020. Multiple regression analysis was employed to test the effects of internationalization on IPO performance, and the PROCESS macro was applied to test the moderating effects. Founder CEO as a proxy of a founders’ role was a moderator variable where internationalization was a predictor variable and IPO underpricing, a proxy of IPO performance, was the outcome variable. The results revealed that internationalization demonstrated no statistically significant effect on IPO underpricing. A non-founder CEO had a moderating effect on the influence of internationalization on IPO underpricing, whereas a founder CEO revealed no moderating effect. Specifically, internationalization had a negative effect on IPO underpricing once an international firm had a non-founder CEO. A decrease in IPO underpricing of international firm is clearly explained by the results of this study.

Finance Impact of corporate governance on the valuation of IPOs in Pakistan stock exchange listed Firms. A moderating role of the family Ownership.

The objective of our study is to investigate the impact of the corporate governance on the IPO performance with moderating impact of the family ownership. To investigate that relationship, we used the data of IPOs registered from 2008 to 2017 in Pakistan Stock exchange. We used the OLS methods to analysis of the data. Our findings shows that Board independence (BIND) has positive significant relationship with IPO return, it means that independent directors have the more technical knowledge and experience in maintaining the IPO return and making the strong policy for the organizations. CEO duality has the significant negative relationship with IPO return with (P=0.0833), it means that when CEO has the combine rule then decisions are not distributed, and monopoly existed in decisions that leads to the negative impact on the IPO performance. Board diligence, Board size, ownership concentration and gender diversity have no impact are being seen in our analysis. In the moderating effect of the family ownership in reference to board diligence (BD) the results changed to significant positive relationship, it means that with the family-owned firms when board meetings increased then increased in the IPO return due to some factors. With the moderation of the family ownership the results of the Board independence also improved that shows the role of the family-owned firm in between them. Women in the board that means the gender diversity has no impact but with the moderating effect of the family ownership women in the board has significant positive impact. This study is helpful for the financial managers, investors, and the finance students and also for the government, in maintaining the code of the corporate governance.