Earnings management and the Long-term market performance of initial public offerings.Working Paper #9401-29 PDF Download

Author: Siew Hong Teoh,T.J.Wong,Gita R. Rao
Publisher:
ISBN:
Category :
Languages : en
Pages : 44

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Author: Frank Ecker
Publisher: Springer Science & Business Media
ISBN: 3834981176
Category : Business & Economics
Languages : en
Pages : 146

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Frank Ecker examines the performance of U.S. initial public offerings (IPOs) from 1980 to 2002. He links positive and negative abnormal returns to the deviation of the realized information risk from the expected information risk. The author proposes effective measures for a long-term profitable investment strategy in IPOs.

Author: Siew Hong Teoh
Publisher:
ISBN:
Category : Cash management
Languages : en
Pages : 58

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Author: Fotini Mastroianni
Publisher: GRIN Verlag
ISBN: 3668440700
Category : Business & Economics
Languages : en
Pages : 36

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Essay from the year 2012 in the subject Economics - Finance, , language: English, abstract: The main reason why companies decide to proceed with IPO is mainly to gain access to new funding. The proceeds from the share issue itself are not necessarily intended for direct expansion. The prospects for growth from acquisitions, the funds available for organizational expansion and refinancing of current borrowings have shown, among other things, to be the main motives that newly listed companies consider as very important. The general initial public offering procedure enhances the image and publicity of enterprises and gets not only an initial certification of the professionals in the financial markets but also a long-term price bidding (price signal) to suppliers, workforce and customers. According to Roell (1996), a robust equity value in the subsequent acquisition (during the trading of securities after their initial bid for public offering) reassures suppliers that they can safely grant trade credit, employees are convinced that they can expect a fairly stable job, and customers think that the products of the company will be supported as a result of their purchase (in the aftermath of their purchase).

Author: Bengi Özer
Publisher:
ISBN:
Category : Going public (Securities)
Languages : en
Pages : 298

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Öz/Özet/İçindekiler CONTENTS TABLE OF CONTENTS vii LIST OF FIGURES x LIST OF TABLES xi 1. INTRODUCTION 1.1. Importance of IPOs as a Research Area 1 1.2. Purpose of the Study 2 2. LITERATURE REVIEW 5 2.1. Initial Performance of IPOs 5 2.1.1. Short Term Underpricing 5 2.1.2. Hot Issue Markets 7 2.2 Claims of Investor Irrationality 8 2.3. Alternative Equilibrium Explanations 10 2.3.1. Information Asymmetry Between Informed and Uninformed Investors 10 2.3.2. Partial Adjustment Hypothesis 11 2.3.3. Information Asymmetry Between the Underwriter and the Issuer 12 2.3.4. Monopsony Power Hypothesis 13 2.3.5. Signaling by Underwriter Reputation 13 2.3.6. Signaling by Choice of Offering Method 14 2.3.7. Underpricing as a Signal of Firm Quality 15 2.3.8. Signaling by the Amount of Equity Retained 16 2.3.9. Signaling by Third Party Certification 16 2.3.10. Implicit Insurance Hypothesis 17 2.3.11. Market Structure as a Source of Underpricing 19 2.4. International Evidence 20 3. DATA AND METHODOLOGY 23 3.1. Data and Data Collection Methods 23 3.2. Variables Used 24 3.2.1. Performance Variables 24 3.2.1.1. Raw Returns 25 3.2.1.2. Market Adjusted Returns 26 3.2.1.3. Market Adjusted Aftermarket Returns 27 3.2.2. Characteristic Variables 28 3.2.2.1. Market Related Characteristics 28 3.2.2.2. Issue Related Characteristics 28 3.2.2.3. Issuing Firm Characteristics 29 3.2.3.1. Underwriter Characteristics 30 3.3. Methodology 30 3.3.1. Documentation of Return Structures 30 3.3.2. Tests on the Presence of Abnormal Returns 31 3.3.3. Relationship Between Initial and Aftermarket Returns 32 3.3.4. Cross-sectional Differences in IPO Returns 32 3.3.5. Determinants of Initial Returns 33 4. RESULTS 35 4.1. Return Structures of IPOs 35 4.1.1. Raw Returns 35 4.1.2. Market Adjusted Returns 41 4.1.2.1. Excess-over-the market Appoach 41 4.1.2.2. Cross-sectional Regressions Method 45 4.1.3. Adjusted Aftermarket Returns 47 4.2. Relationship, Between Market Performance Masures 51 4.3. Characteristics of IPOs 54 4.3.1. Performance Variables 54 4.3.1.1. Initial Performance 54 4.3.1.2. Long Term Performance 54 4.3.2. Market Related Characteristics 55 4.3.2.1. Year of Issue 56 4.3.2.2. Indicators of Market Trend 57 4.3.2.3. Indicators of Market Volatility 58 4.3.3. Issue Related Characteristics 58 4.3.3.1. Real Offer Price 59 4.3.3.2. Place of Offer 59 4.3.3.3. Real Amount for Sale 59 4.3.3.4. Source of Equity Sold 60 4.3.3.5. Percentage of Equity Offered 60 4.3.3.6. Nature of the Issue 61 4.3.4. Issuing Firm Characteristics 61 4.3.4.1. Age at the Offer 63 4.3.4.2. Industry Classification 62 4.3.4.3. Number of Shareholders Be forethcIPO 63 4.3.5. Underwriter Characteristics 63 4:3.5.1. Identity of the Lead Underwriter 63 4.3.5.2. Number of Underwriters in an Offer 65 4.3.5.3. Relationship Between the Underw and Issuer 66 4. Cross-sectional Differences in IPO Returns 66 4.4.1. Market Related Characteristics 67 4.4.1.1. Year of Issue 67 4.4.1.1.1. Initial Returns 68 4.4.1.1.2. Adjusted After market Returns 70 4.4.1.2. Market Trend at the Time of IPO 75 4-4.2. Issue Related Characteristics 77 4.4.2.1. Nature of the Issue 77 4.4.2.2. Real Offer Price 81 4.4.2.3. Place of Offe 82 4.4.3. Issuing Firm Related Characteristics 84 4.4.4 Underwriter Characteristics 85 4.4.4.1. Identity of the Lead Underwriter 85 4.4.4.2. Number of Underwriters in an Offer 86 4.4.4.3. Relationship Between the Underwriter and Issuer 86 4.5. Determinants of Initial Returns 90 4.5.1. Total Sample 91 4.5.2. Excluding Initial Outliers 95 5. CONCLUSIONS 97 6. REFERENCES 101.