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Public Offerings (public + offering)
Kinds of Public Offerings Selected AbstractsThe Influence of Top Management Team Heterogeneity on the Capital Raised through an Initial Public OfferingENTREPRENEURSHIP THEORY AND PRACTICE, Issue 3 2008Monica A. Zimmerman A significant body of research exists on the top management teams (TMTs) of established firms and specifically on the heterogeneity of TMTs of established firms. Little research exists, however, on the heterogeneity of TMTs of firms in the early stages of their existence. In this study, I examine the relationship among TMT heterogeneity and the capital raised by the firm through its initial public offering (IPO). I argue that TMT heterogeneity provides a signal to potential investors about the quality of the IPO and hence is associated with greater capital accumulations. My findings suggest that heterogeneity in the TMT's functional background and educational background is associated with greater capital raised through an IPO. [source] The Performance of Internet Firms Following Their Initial Public OfferingFINANCIAL REVIEW, Issue 4 2002Jarrod Johnston We find that initial returns were more favorable for Internet initial public offerings (IPOs) than non,Internet firm IPOs. Since the demise of the Internet sector, the underpricing of Internet,firm IPOs is not significantly different from other IPOs. Initial returns of Internet firms are positively and significantly related to underwriter prestige and to pre,IPO market conditions. However, initial returns after the demise of the Internet sector are not significantly related to these characteristics. The aftermarket performance of Internet firms is initially favorable but weakens over time. Firms that experienced higher initial returns during the strong Internet cycle experience weaker aftermarket performance. [source] Ambiguous incorporations: microfinance and global governmentalityGLOBAL NETWORKS, Issue 2 2010ROB AITKEN Abstract In the spring of 2007 an event dramatically reshaped conversations relating to microfinance. This event was the Initial Public Offering (IPO) of Mexico's largest microfinance organization, Compartamos. The IPO, as this article suggests, is indicative or a broader trend through which microfinance is increasingly becoming financialized, increasingly becoming governable as a financial object. This is important at one level because it crystallizes some of the key issues at stake as microfinance becomes increasingly more reliant on global capital markets. At another level, however, the Compatarmos case is significant because of the conceptual issues it raises in relation to global finance. The main argument I put forward in this article is that the Compatarmos case , and the process of financialization it represents , is important because it allows us to glimpse global finance, and the question of global financial governance, as a decentred process in formation. Drawing on a Foucauldian notion of governmentality, I argue that the Compatarmos case orbits around two processes; processes of incorporation and differentiation. In this context, the Compartamos case implies the importance of analyses that can make global finance visible as a diverse and mundane object that is never settled in any final kind of way. [source] The Association between Auditor Choice, Ownership Retained, and Earnings Disclosure by Firms Making Initial Public Offerings,CONTEMPORARY ACCOUNTING RESEARCH, Issue 1 2002Paul A. Copley Abstract Using a system of three simultaneous equations, we test the predictions of Datar, Feltham, and Hughes 1991 and Hughes 1986 between auditor choice, earnings disclosures, and retained ownership in U.S. firms making initial public offerings of securities. Using a sample of initial public offerings between 1990 and 1997, we find that the demand for high-quality auditors increases with firm risk. Additionally, we find that auditor choice, earnings disclosure, and risk are determinants of retained ownership, which is consistent with the predictions of Datar et al. and Hughes that auditor choice and direct disclosure are substitute signals for ownership retention. Further, our results suggest that the signals chosen (i.e., retained ownership, auditor choice, and disclosure) are related through their cost structures and are chosen jointly to minimize the overall cost to the entrepreneur. [source] Initial Public Offerings: IntroductionEUROPEAN FINANCIAL MANAGEMENT, Issue 4 2009Tim Jenkinson Guest Editor No abstract is available for this article. [source] Moving from Private to Public Ownership: Selling Out to Public Firms versus Initial Public OfferingsFINANCIAL MANAGEMENT, Issue 1 2008Annette B. Poulsen We study two alternative means to move assets from private to public ownership: through the acquisition of private companies by firms that are public (sellouts) or through initial public share offerings (IPOs). We consider firm-specific characteristics for 1,074 IPO and 735 sellout firms to identify differences in growth, capital constraints, and asymmetric information between the two types of transactions. Our results suggest that firms move to public ownership through an IPO when they have greater growth opportunities and face more capital constraints. We provide a better understanding of the firm-specific characteristics that lead firms to go public. [source] Does an Industry Effect Exist for Initial Public Offerings?FINANCIAL REVIEW, Issue 4 2003Aigbe Akhigbe G14 Abstract We examine the impact of initial public offerings (IPOs) on rival firms and find that the valuation effects are insignificant. This insignificant reaction can be explained by offsetting information and competitive effects. Significant positive information effects are associated with IPOs in regulated industries and the first IPO in an industry following a period of dormancy. Significant negative competitive effects are associated with larger IPOs in competitive industries, those in relatively risky industries, those in high-performing industries, and those in the technology sector. IPO firms that use the proceeds for debt repayment appear to represent a more significant competitive threat to rival firms relative to IPO firms that use their proceeds for other purposes. [source] Country-Specific Risk and the Cost and Benefit of Audit Quality: Evidence from Israeli Initial Public Offerings in the United StatesINTERNATIONAL JOURNAL OF AUDITING, Issue 3 2002Edward B. Douthett Jr. We examine audit fees and returns to auditor reputation for Israeli entrepreneurs making initial public offerings (IPOs) of equity in U.S. capital markets. We find that the cost of audit quality in terms of audit fees is higher, and the benefit of audit quality in terms of IPO proceeds is lower for a sample of Israeli IPOs matched to a control sample of U.S. IPOs. The results suggest that the higher levels of country-specific risk in Israel are modifying the cost and benefits of audit quality for Israeli entrepreneurs selling securities in the U.S. [source] The Long Run Share Price Performance of Malaysian Initial Public Offerings (IPOs)JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2007Nurwati A. Ahmad-Zaluki Abstract:, This paper investigates the long run share price performance of 454 Malaysian IPOs during the period 1990 to 2000. In contrast with developed markets, significant overperformance is found for equally-weighted event time CARs and buy-and-hold returns using two market benchmarks, though not for value-weighted returns or using a matched company benchmark. The significant abnormal performance also disappears under the calendar-time approach using the Fama-French (1993) three factor model. While the long run performance of Main and Second Board IPOs does not differ, the year of listing, issue proceeds and initial returns are found to be performance-related. [source] Why do Underwriters Charge Low Underwriting Fees for Initial Public Offerings in Taiwan?JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2006Hsuan-Chi Chen Abstract:, In Taiwan, underwriting fees for initial public offerings (IPOs) are extremely low compared to fees in other countries. From 1989 to 1999, the average underwriting fee for IPOs in Taiwan is 0.99%,far below the regulatory limit. Although the Taiwanese underwriting industry is highly concentrated, underwriting fees do not cluster at any particular level. We examine the underwriting fee and income structure in Taiwan and find support for an incentive hypothesis. Underwriters have an incentive to charge lower underwriting fees when market demand for IPO shares increases and capital gains account for a larger portion of their total income. [source] Initial Public Offerings: An Analysis of Theory and PracticeTHE JOURNAL OF FINANCE, Issue 1 2006JAMES C. BRAU ABSTRACT We survey 336 chief financial officers (CFOs) to compare practice to theory in the areas of initial public offering (IPO) motivation, timing, underwriter selection, underpricing, signaling, and the decision to remain private. We find the primary motivation for going public is to facilitate acquisitions. CFOs base IPO timing on overall market conditions, are well informed regarding expected underpricing, and feel underpricing compensates investors for taking risk. The most important positive signal is past historical earnings, followed by underwriter certification. CFOs have divergent opinions about the IPO process depending on firm-specific characteristics. Finally, we find the main reason for remaining private is to preserve decision-making control and ownership. [source] The Really Long-Run Performance of Initial Public Offerings: The Pre-Nasdaq EvidenceTHE JOURNAL OF FINANCE, Issue 4 2003Paul A. Gompers Financial economists have intensely debated the performance of IPOs using data after the formation of Nasdaq. This paper sheds light on this controversy by undertaking a large, out-of-sample study: We examine the performance for five years after listing of 3,661 U.S. IPOs from 1935 to 1972. The sample displays some underperformance when event-time buy-and-hold abnormal returns are used. The underperformance disappears, however, when cumulative abnormal returns are utilized. A calendar-time analysis shows that over the entire period, IPOs return as much as the market. The intercepts in CAPM and Fama,French regressions are insignificantly different from zero, suggesting no abnormal performance. [source] Price Discovery in Initial Public Offerings and the Role of the Lead UnderwriterTHE JOURNAL OF FINANCE, Issue 6 2000Reena Aggarwal We examine the price discovery process of initial public offerings (IPOs) using a unique dataset. The first quote entered by the lead underwriter in the five-minute preopening window explains a large proportion of initial returns even for hot IPOs. Significant learning and price discovery continues to take place during these five minutes with hundreds of quotes being entered. The lead underwriter observes the quoting behavior of other market makers, particularly the wholesalers, and accordingly revises his own quotes. There is a strong positive relationship between initial returns and the time of day when trading starts in an IPO. [source] Inference in Long-Horizon Event Studies: A Bayesian Approach with Application to Initial Public OfferingsTHE JOURNAL OF FINANCE, Issue 5 2000Alon Brav Statistical inference in long-horizon event studies has been hampered by the fact that abnormal returns are neither normally distributed nor independent. This study presents a new approach to inference that overcomes these difficulties and dominates other popular testing methods. I illustrate the use of the methodology by examining the long-horizon returns of initial public offerings (IPOs). I find that the Fama and French (1993) three-factor model is inconsistent with the observed long-horizon price performance of these IPOs, whereas a characteristic-based model cannot be rejected. [source] Stabilization Activities by Underwriters after Initial Public OfferingsTHE JOURNAL OF FINANCE, Issue 3 2000Reena Aggarwal Prior research has assumed that underwriters post a stabilizing bid in the aftermarket. We find instead that aftermarket activities are less transparent and include stimulating demand through short covering and restricting supply by penalizing the flipping of shares. In more than half of IPOs, a short position of an average 10.75 percent of shares offered is covered in 22 transactions over 16.6 days in the aftermarket, resulting in a loss of 3.61 percent of underwriting fees. Underwriters manage price support activities by using a combination of aftermarket short covering, penalty bids, and the selective use of the overallotment option. [source] Is CEO Duality Always Negative?CORPORATE GOVERNANCE, Issue 2 2009An Exploration of CEO Duality, Ownership Structure in the Arab IPO Context ABSTRACT Manuscript type: Empirical Research Question/Issue: This paper examines the relationships between initial public offering (IPO) underpricing, CEO duality, and strategic ownership in 12 Arab countries of the Middle East and North Africa (MENA) region. Research Findings/Results: Using all IPOs from January 2000 until the end of July 2007, we document an average IPO underpricing of 184.1 per cent. Underpricing is higher in IPO firms that have CEO duality. However, strategic shareholders, such as corporations and other industry-related investors, are likely to play a monitoring role whereas underpricing is found to be lower in firms with both CEO duality and strategic shareholder ownership. Moreover, the negative relation between underpricing and strategic blockholding is greater for foreign strategic ownership than it is for domestic strategic ownership. Theoretical Implications: This paper examines the level and determinants of IPO underpricing in the MENA region. It provides evidence on the role played by foreign strategic owners in reducing agency conflicts and information asymmetries within an environment where firms may be affected by the cultural issues related to political ties and family involvement. Practical Implications: Our results contribute to the existing debate on the appropriate regulations for an effective and stable financial system in Arab countries. They offer policy-makers additional evidence on the positive impact of market openness to foreign shareholders. [source] The Influence of Top Management Team Heterogeneity on the Capital Raised through an Initial Public OfferingENTREPRENEURSHIP THEORY AND PRACTICE, Issue 3 2008Monica A. Zimmerman A significant body of research exists on the top management teams (TMTs) of established firms and specifically on the heterogeneity of TMTs of established firms. Little research exists, however, on the heterogeneity of TMTs of firms in the early stages of their existence. In this study, I examine the relationship among TMT heterogeneity and the capital raised by the firm through its initial public offering (IPO). I argue that TMT heterogeneity provides a signal to potential investors about the quality of the IPO and hence is associated with greater capital accumulations. My findings suggest that heterogeneity in the TMT's functional background and educational background is associated with greater capital raised through an IPO. [source] Differences between European and American IPO MarketsEUROPEAN FINANCIAL MANAGEMENT, Issue 4 2003Jay R. Ritter G24; G32; G14; G15 Abstract This brief survey discusses recent developments in the European initial public offering (IPO) market. The spectacular rise and fall of the Euro NM markets and the growth of bookbuilding as a procedure for pricing and allocating IPOs are two important patterns. Gross spreads are lower and less clustered than in the USA. Unlike the USA, some European IPOs, especially those in Germany, have when-issued trading prior to the final setting of the offer price. Current research includes empirical studies on the valuation of IPOs and both theoretical and empirical work on the determinants of short-run underpricing. [source] The Impact of Fundamentals on IPO ValuationFINANCIAL MANAGEMENT, Issue 2 2009Rajesh Aggarwal We examine how initial public offering (IPO) valuation has changed over time by focusing on three time periods: 1986-1990, January 1997 to March 2000 (designated as the boom period), and April 2000 to December 2001 (designated as the crash period). Using a sample of 1,655 IPOs, we find that firms with more negative earnings have higher valuations than do firms with less negative earnings and firms with more positive earnings have higher valuations than firms with less positive earnings. Our results suggest that negative earnings are a proxy for growth opportunities for Internet firms and that such growth options are a significant component of IPO firm value. [source] Risk disclosures on the second tier markets of the London Stock ExchangeACCOUNTING & FINANCE, Issue 4 2009Paula Hill G32 Abstract The identification, management and disclosure of risks have been the subject of recent legislation, directives and reporting standards issued across a number of international jurisdictions. To inform the disclosure debate, this paper provides a detailed analysis of the risk warning disclosures of initial public offering (IPO) companies and the factors that drive such disclosures. We find that risk disclosures of IPO companies contain a greater proportion of forward-looking information but a lower proportion of information on internal controls and risk management than the disclosures of listed companies. We find evidence that such disclosure has increased across time but that larger directors' shareholdings are associated with a reduction in risk disclosure. [source] Audit quality, auditor compensation and initial public offering underpricingACCOUNTING & FINANCE, Issue 3 2008Xin Chang G32; D82; M42 Abstract We jointly study the impact of audit quality on auditor compensation and initial public offering (IPO) underpricing using a sample of Australian firms going public over the period 1996,2003. We find that quality (Big Four) audit firms earn significantly higher fees than non-Big Four auditors, and audit quality is positively associated with IPO underpricing. The positive relation between audit quality and underpricing is more pronounced for small issues, IPOs underwritten by non-prestigious underwriters, and those that are not backed by venture capitalists. Taken together, our results suggest that quality auditors serve as a signalling device that enhances post-issue market value of equity. [source] Industry Clustering in Nordic Initial Public Offering MarketsINTERNATIONAL REVIEW OF FINANCE, Issue 1-2 2006P. Joakim Westerholm ABSTRACT We present institutional features of the Nordic initial public offering (IPO) markets and relate initial return, long-run performance and size of companies listed during 1991,2002 to industry clustering and level of listing requirements. High industry clustering is related to higher initial return and lower long-run performance supporting our prediction that information asymmetry has an impact on initial underpricing while temporary overvaluation affects long-run performance. The relatively high listing requirements and targeting of the main market have not protected the Nordic IPOs from poor long-run performance. On two markets, Norway and Denmark, IPOs outperform the all share market index. [source] Do Expert Informational Intermediaries Add Value?JOURNAL OF ACCOUNTING RESEARCH, Issue 4 2003Evidence from Auditors in Microcap Initial Public Offerings Do expert informational intermediaries add value? We address this question by examining the informativeness of the audit report contained in the prospectus associated with a firm's initial public offering (IPO). At the time of the IPO, there is a relative lack of information to facilitate the establishment of equity values, suggesting that the information provided by outside "experts" (e.g., auditors, underwriters) is particularly important. In this article we study small, non-venture-backed IPOs, a segment of the market with the poorest long-run performance and where the prestigious audit firm is often the sole (if any) expert present. We find that the pre-IPO opinions of larger auditors are more predictive of post-IPO negative stock delistings. Of particular note, the opinions of the national-tiered firms are comparably predictive to those of the Big 6, though this finding emerges only after we consider the selectivity-based differences in the clients that hire these national firms. Our findings also indicate that, for larger auditors the presence of a pre-IPO going-concern opinion is more strongly associated with first-year stock returns and that larger auditors are more likely to give such opinions to their distressed clients. Overall, we address a deficiency in the literature relating to "the paucity of evidence on the value of auditor opinions to investors" (Healy and Palepu [ 2001 p. 415]). [source] Initial Public Offerings: An Analysis of Theory and PracticeTHE JOURNAL OF FINANCE, Issue 1 2006JAMES C. BRAU ABSTRACT We survey 336 chief financial officers (CFOs) to compare practice to theory in the areas of initial public offering (IPO) motivation, timing, underwriter selection, underpricing, signaling, and the decision to remain private. We find the primary motivation for going public is to facilitate acquisitions. CFOs base IPO timing on overall market conditions, are well informed regarding expected underpricing, and feel underpricing compensates investors for taking risk. The most important positive signal is past historical earnings, followed by underwriter certification. CFOs have divergent opinions about the IPO process depending on firm-specific characteristics. Finally, we find the main reason for remaining private is to preserve decision-making control and ownership. [source] Do Initial Public Offering Firms Purchase Analyst Coverage with Underpricing?THE JOURNAL OF FINANCE, Issue 6 2004MICHAEL T. CLIFF ABSTRACT We report that initial public offering (IPO) underpricing is positively related to analyst coverage by the lead underwriter and to the presence of an all-star analyst on the research staff of the lead underwriter. These findings are robust to controls for other determinants of underpricing and to controls for the endogeneity of underpricing and analyst coverage. In addition, we find that the probability of switching underwriters between IPO and seasoned equity offering is negatively related to the unexpected amount of post-IPO analyst coverage. These findings are consistent with the hypothesis that underpricing is, in part, compensation for expected post-IPO analyst coverage from highly ranked analysts. [source] INVESTORS ADJUST EXPECTATIONS AROUND SELL-SIDE ANALYST REVISIONS IN IPO RECOMMENDATIONSTHE JOURNAL OF FINANCIAL RESEARCH, Issue 1 2009Deepika Bagchee Abstract In this article I compare investor response to sell-side analyst recommendation revisions of initial public offering (IPO) firms in the first three years after issue with that of a benchmark control sample of firms that have been public longer. I test whether investors in IPO firms adjust their initially optimistic expectations as information about new issues is released and uncertainty is resolved. In support of my hypothesis that investors adjust expectations downward, I find abnormally negative returns around analyst revisions of IPO firm recommendations. Additionally, I find the effect of analyst revisions on long-run performance of IPO firms is economically significant. [source] Winner's Curse in Initial Public Offering Subscriptions with Investors' Withdrawal OptionsASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, Issue 1 2010Dennis K. J. Lin G24; G38 Abstract Contrary to fixed-priced initial public offering (IPO) subscribers in many other countries, IPO subscribers in Taiwan own the option to withdraw from their IPO allocations after learning the allocation rate (ALLOC). Investors' option to withdraw reduces the information asymmetry between informed investors and uninformed investors but increases the firm-commitment underwriting risk. We show that under investors' option to withdraw, uninformed investors can improve their performance by learning from the ALLOC and/or the withdrawal rate. Consequently, firm-commitment underwriters will absorb more overpriced shares. Unless underwriters are compensated directly by issuers, IPOs should be more underpriced to compensate underwriting activities under investors' option to withdraw. [source] The Association between Auditor Choice, Ownership Retained, and Earnings Disclosure by Firms Making Initial Public Offerings,CONTEMPORARY ACCOUNTING RESEARCH, Issue 1 2002Paul A. Copley Abstract Using a system of three simultaneous equations, we test the predictions of Datar, Feltham, and Hughes 1991 and Hughes 1986 between auditor choice, earnings disclosures, and retained ownership in U.S. firms making initial public offerings of securities. Using a sample of initial public offerings between 1990 and 1997, we find that the demand for high-quality auditors increases with firm risk. Additionally, we find that auditor choice, earnings disclosure, and risk are determinants of retained ownership, which is consistent with the predictions of Datar et al. and Hughes that auditor choice and direct disclosure are substitute signals for ownership retention. Further, our results suggest that the signals chosen (i.e., retained ownership, auditor choice, and disclosure) are related through their cost structures and are chosen jointly to minimize the overall cost to the entrepreneur. [source] Auditor Quality and the Accuracy of Management Earnings Forecasts,CONTEMPORARY ACCOUNTING RESEARCH, Issue 4 2000PETER M. CLARKSON Abstract In this study, we appeal to insights and results from Davidson and Neu 1993 and McConomy 1998 to motivate empirical analyses designed to gain a better understanding of the relationship between auditor quality and forecast accuracy. We extend and refine Davidson and Neu's analysis of this relationship by introducing additional controls for business risk and by considering data from two distinct time periods: one in which the audit firm's responsibility respecting the earnings forecast was to provide review-level assurance, and one in which its responsibility was to provide audit-level assurance. Our sample data consist of Toronto Stock Exchange (TSE) initial public offerings (IPOs). The earnings forecast we consider is the one-year-ahead management earnings forecast included in the IPO offering prospectus. The results suggest that after the additional controls for business risk are introduced, the relationship between forecast accuracy and auditor quality for the review-level assurance period is no longer significant. The results also indicate that the shift in regimes alters the fundamental nature of the relationship. Using data from the audit-level assurance regime, we find a negative and significant relationship between forecast accuracy and auditor quality (i.e., we find Big 6 auditors to be associated with smaller absolute forecast errors than non-Big 6 auditors), and further, that the difference in the relationship between the two regimes is statistically significant. [source] Underpricing and Ex Post Value UncertaintyFINANCIAL MANAGEMENT, Issue 2 2009Sonia Falconieri As documented by a vast empirical literature, initial public offerings (IPOs) are characterized by underpricing. A number of papers have shown that underpricing is directly related to the amount of ex ante uncertainty concerning the IPOs valuation. Recent theoretical papers propose that not all value uncertainty is resolved prior to the start of trading, but rather continues to be resolved in the beginning of the after market. We term this type of uncertainty as ex post value uncertainty and develop proxies for it. We find strong support for the existence of ex post value uncertainty and find that including a proxy for it more than doubles the explanatory power of previous models. [source] | |||||||||||||||||||||||||