Long-term underperformance of public versus rights offering firms

The authors compare the post-issue stock and operating performance of rights issue versus public offer firms using Korean data. The authors find that the stock returns of rights issue firms are less negative than those of public offering firms during the three years subsequent to the seasoned equity offering. The authors further find that the profitability of rights offering firms is superior to those of public offering firms and that the ratio of sales to assets for rights issue firms is much higher over the post-issue period. The results substantiate Heinkel and Schwartz’s (1986) and Eckbo and Masulis’ (1992) theoretical models that posit firms with better quality tend to select the rights issue rather than public offer method when issuing seasoned equity.

The Information Conveyed in a SPAC′s Offering

The popularity of SPACs (Special Purpose Acquisition Companies) has grown dramatically in recent years as a substitute for the traditional IPO (Initial Public Offer). We modeled the average annual return for SPAC investors and found that this financial tool produced an annual return of 17.3%. We then constructed an information model that examined a SPAC′s excess returns during the 60 days after a potential merger or acquisition had been announced. We found that the announcement had a major impact on the SPAC’s share price over the 60 days, delivering on average 0.69% daily excess returns over the IPO portfolio and 31.6% cumulative excess returns for the entire period. Relative to IPOs, the cumulative excess returns of SPACs rose dramatically in the next few days after the potential merger or acquisition announcement until the 26th day. They then declined but rose again until the 48th day after the announcement. Finally, the SPAC’s structure reduced the investors’ risk. Thus, if investors buy a SPAC stock immediately after a potential merger or acquisition has been announced and hold it for 48 days, they can reap substantial short-term returns.

Value-added Activities of Venture Capitals in Entrepreneurial Finance: Evidence from the Growth of Flipkart

Entrepreneurial finance varies as per the startup stage, such as bootstrapping, crowdfunding, angel investors, venture capital (VC), banks and initial public offer (IPO). Many times, entrepreneurial finance comes with knowledge, experience, innovation, value, etc., in addition to the fund brought in. Venture capitals are the most common such contributors. This study illustrates some significant value-added activities by venture capital firms operating in India. It explores some evidence from venture capitals such as Tiger Global, Accel Partners and DST Global who fund Flipkart, an Indian e-commerce firm.

Features of the implementation of a public offer agreement in e-commerce in Ukrainian, Polish and Russian law

Given the specifics of the provision of services and sales of goods on the Internet, the contract of public offer is the most common and close to the electronic format of the agreement. However, in Ukraine, the Russian Federation and the Republic of Poland, as in other countries, the use of this type of legal instruments has a number of problems related to the legal regulation and the procedure for concluding an agreement. This paper examines the main aspects of the legal implementation of public offer agreements in the above countries. Thus, the subject of the study is the contract of public offering as a legal phenomenon. The purpose of the work is to determine the main problems of concluding a public offer contract in electronic mode, and to find optimal solutions in the context of the stated issues, based on the legislation and practice of selected countries

The specificity of establishment of relationships from a public promise of a reward without contest

The article is devoted to consideration the specialties of order of establishment the obligation from a public promise of a rewardwithout contest. The author defines the similarities and differences between the legal order of establishing relationships in abovementionedway and the order of establishing a relationship under the contract. It is designated that in some cases the public promise ofreward without contest can be considered as public offer that addressed to indefinite number of persons.At the same time there is a difference between abovementioned mechanisms of establishment of relationships. In case when relationshipsestablishes from a public promise of a reward without contest there is a task completion between such a promise and relationshipsestablishment. The only acceptance of the task conditions is not enough to establish the relationships. But when a contract is concludingthe acceptance of an offer is enough to cause such effect.The task completion is taken out of the legal relationship and considered as the ground for establishment the obligation. Onlywhen the character of the task determines the necessity to transfer its result from performer to a person who promised the reward thetask completion is considered as a condition for establishment the obligation. At the same time in contractual relationships the juridicallyimportant actions are committed within the relationships and have character of right-realization and carrying out the responsibi -lities.Thereby when legal relationships establishes from public promise of a reward without contest the person who promised the rewardis getting the good that is the result of task completion before the establishment of relationship or in the moment of its establishment. Butwhen the legal relationships establishes from the contract its participants get the effect as a result of realization the right and carrying outthe responsibilities that comprised by the content of appropriate relationships. Consequently the public character of a reward that addressesto indefinite number of persons intended to increase the probability to get some good that has the unique character.

Thriving the Transformation Process of MFI through IPOs - Case Study of Indian MFIs

The Indian microfinance firms are stabilizing from the microfinance crisis of 2010. The firms are oscillating in taking the decisions about financing through debt or equity. Some of the firms, even after getting approval from regulatory bodies for going through Initial Public Offer (IPO), are deferring their plans. In this perspective, the present research has been initiated to identify the capital market risk. Four Indian IPOs held between 2016 and 2019 are studied. The result indicates that there is an inverse relationship between the profitability of the firm and the IPO subscription rate.

Effects of IPO Offer Price Ranges on Initial Subscription, Initial Turnover and Ownership Structure—Evidence from Indian IPO Market

In this paper, we establish the significance and effects of initial public offer (IPO) offer price ranges on subscription, initial trading, and post-IPO ownership structures. The primary market in India provides a unique setting for estimating the effect of various initial public offer (IPO) price ranges and IPO issue factors on the initial demand for an IPO among investors, measured by full IPO subscription/oversubscription, initial turnover (liquidity), and the post-IPO listing ownership structure among investors (ownership). For the IPO pre-listing stage, this study uses firth logistic regression to estimate the effect of various IPO offer price ranges (low to high) and various IPO issue factors on the full subscription/oversubscription of an IPO in each investor category. For the post-IPO listing stage, the study uses OLS regression to estimate the effect of various IPO offer price ranges (low to high) and various IPO issue factors on the initial trading ratio (IPO listing day trading) and the ownership percentage between institutional and individual investors. We find that all investor categories show a lesser likelihood for full subscription or oversubscription of an IPO issue at the lowest range of IPO offer prices. At the post-listing stage, the results indicate a diverse IPO offer price range in which individuals and institutions maximize their respective ownership holdings after the IPO listing. The results further show that lower promoter holdings diffuse higher ownership among individual shareholders by targeting lower IPO offer prices, thus increasing control.

Strategic Decisions in Takeover Auctions: Recent Developments

We review recent research into how firms navigate four complex decisions in corporate takeovers: ( a) deal initiation, ( b) pre-offer toehold acquisition, ( c) the initial (public) offer price, and ( d) the payment method. We focus the evidence on public targets and the theory on first-price or English (ascending-price) auctions with two competing bidders and a single (pivotal) seller. The evidence shows that nearly half of bids are initiated by the target (not a bidder). Notwithstanding the large offer premiums, only a small fraction of bidders acquire a target toehold prior to bidding. The first bid rarely attracts rival bidders, suggesting effective competition deterrence. Bid jumps are high, as predicted when bidding costs are large. Pre-bid stock price run-ups reflect rational market deal anticipation and are understood as such by the deal negotiators. Bidders select stock payment when concerned with adverse selection on the target side of the deal.

Valuation Analysis of Initial Public Offer (IPO): The Case of India

In today’s fast moving and dynamic world, short-term investors face difficulty while choosing which avenue to invest in. Investors view investment in securities as a highly risky avenue due to VUCA (Volatility, Uncertainty, Complexity and Ambiguity) pertaining to future movement of security prices. The study has been carried out to analyse the post-Initial Public Officer (IPO) performance of various companies that have gone public in 2017 using event study methodology. The study also tries to determine whether these IPOs were underpriced in short run and identifies various factors that influence the movement of such IPOs in the short run. The study found that about 70 per cent of the selected IPOs are underpriced in short run and the movement of these IPOs in short run is not influenced by the age of the company, issue size of the IPO, ownership sector and the promoter’s holdings after the issue.

18. Public offers of shares

This chapter studies the sources of securities regulation, the rules relating to offering shares to the public, the various UK stock exchanges, and the process by which securities are listed. There are several types of public offer, including offers for subscription, offers for sale, placings, and rights issues. The London Stock Exchange is the principal UK stock exchange, and its two principal markets are the Main Market and the Alternative Investment Market. The principal domestic rules relating to public offers of shares are found in the Financial Services and Markets Act 2000, the Listing Rules, the Prospectus Rules, and the Disclosure and Transparency Rules. Companies that offer securities to the public or seek to admit securities to a UK regulated market must first publish a prospectus. Meanwhile, listed companies must comply with a range of continuing obligations for as long as their securities remain listed.