Past research on initial public offers (IPO) marketing highlights the positive impact of underwriters’ efforts on the post-IPO marketing and financial outcomes for the IPO issuer firms but the exact ...mechanism underlying these ‘carry-over’ effects is still not clear. We address this important research gap by exploring the impact of total underwriting effort (i.e., combined efforts by underwriters and other players involved in IPO issuance) on the issuer firms’ post-IPO performance and the mediating role of IPO issuer satisfaction in this process. We test all the hypotheses using data from the China Stock Market and Accounting Research (CSMAR) database on 2,013 IPOs listed on Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE). Our findings provide a holistic view of the complex marketing forces that drive the total underwriting effort on the IPO issuer firms’ post-IPO performance, and the focal role played by IPO issuer satisfaction in this process.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
The primary objective of this paper is to examine a number of variables that can have a significant impact on formation of IPO waves in the banking sector. As the banking industry has faced several ...crises during the last two decades that led to a tightening of control over the sector, banks actively resorted to the IPO market as a way to attract additional capital to cope with the strict regulation standards and expand their business activities. Banks tended to place their shares during hot IPO markets causing clusterization. The current study finds relationship between several macro variables that can affect formation of hot IPO markets leading to an increase in IPO volume.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
IPO (initial public offering) is a widespread financing instrument in the world, however, the scientific community pays little attention to the dynamics of IPOs in the banking sector. The
aim
of the ...study is to critically analyze the dynamics of IPO transactions of credit institutions on the horizon from January 1, 2000, to December 31, 2020. The research
methodology
includes analytical methods for collecting and processing information, comparative and graphical analysis of the database collected by the author and consisting of 305 IPOs of banks from 2000 to 2020. The study compares the dynamics of IPO transactions of credit institutions from developed and developing countries, identifies characteristics inherent in each market, and explains the differences in market dynamics. The study reveals clustering in the IPO market of credit institutions and compares clustering with the general market of initial public offerings. It is shown that lending institutions around the world have actively attracted funds through IPO, having placed their shares for a total of $ 218 billion. The bulk of the funds were attracted by banks from emerging markets, primarily from China. During this period, there were 3 IPO waves on the banking IPO market, characterized by a significant increase in placement volumes and profitability on the first day of trading. This clustering in the IPO market of credit institutions was not typical only for the banking sector but coincided with the global growth in the number of transactions and IPO yields. The author
concludes
that the placement of shares of credit institutions during the hot market period is the most promising in terms of the volume and dynamics of raising funds; the IPO market of credit institutions retains high growth potential, primarily in Asia and the CIS.
We investigate how director networks impact IPO characteristics and find that firms with better-connected directors have higher IPO market valuation, more positive offer price revisions, higher ...first-day returns, more pre-IPO media coverage, and superior post-IPO stock performance. Director networks are beneficial to the share offering because corporate directors help facilitate information exchange with prospective investors, attract their attention to the IPO, and maintain and grow their interest after the IPO.
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The Indian IPO market showcased resilience during the global stock market downturn in 2022, emerging as a notable bright spot in regions such as Europe, the Middle East, India, and Africa. As the ...bullish rally of 2022 persists, Indian stock markets remain enticing for foreign institutional investors in 2023. A resurgence in IPO activity is anticipated, driven by increasing momentum and larger deals that are poised to overcome the constraints of subdued global sentiments and liquidity pressures, addressing the challenges posed by these factors. The study offers insights into factors influencing IPO subscriptions, capitalizing on the context of heightened stock market volatility and optimistic trends in the Indian stock market. A total of 132 IPOs listed on the Indian stock market between April 2019 and March 2023 were analyzed in this study. Multiple Linear Regression was used to assess the strength of the association between several factors outlined in the literature, and the overall subscription. Among the ten variables investigated in the study, it was observed that three variables under the external factors, specifically Grey Market Premium, IPO Rating, and Broker Recommendations, exerted a significant influence on the overall subscription. While other factors such as allocation proportion and issue attributes, were found to have no discernible influence on the overall subscription. The results indicate that the Indian IPO market demonstrates a prevalence of speculative behavior and a stronger reliance on expert recommendations, rather than being primarily driven by IPO characteristics.
Acknowledgment Authors acknowledge that the publication fee is funded by Kingdom University, Bahrain.
Specialist CEOs and IPO survival Gounopoulos, Dimitrios; Pham, Hang
Journal of corporate finance (Amsterdam, Netherlands),
02/2018, Volume:
48
Journal Article
Peer reviewed
Open access
This study examines the influence of specialist CEOs on the probability of failure and survivability of initial public offering (IPO) firms. We construct a generalist skills index based on CEOs' past ...employment history in order to classify CEOs into specialist and generalist ones. Specialist CEOs pursue a career in particular functional roles, firms and industry sectors, as opposed to generalist CEOs who accumulate their work experience through various positions, firms and industries. We uncover strong evidence that IPO firms with a specialist CEO have a lower probability of failure and a longer time to survive in subsequent periods following the offering. The findings suggest that specialist managerial ability has significant implications for post-issue performance of newly listed firms. Additionally, specialist CEOs may have incentives that are more aligned with those of the firm and its shareholders; thus, they are more likely to enhance the viability of IPO firms for a longer period of time.
•Approximately 36% of IPOs either fail or are acquired within five years after the offering.•IPO firms with a specialist CEO have a lower probability of failure and a longer time to survive.•Specialist managerial ability has significant implications for post-issue performance on IPOs.•Ideal combinations for survival are ‘specialist and professional skills’ and a ‘specialist and outside experiences’.•Specialist CEOs have incentives that are more aligned with those of the firm and its shareholders.
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This case delves into market risk management in an initial public offering (IPO) investment arising due to the unexpected onset of the pandemic. The protagonist in the case is overwhelmed by the ...euphoria surrounding the IPO issue of SBI Cards and turns into a speculator instead of a normal investor. He makes a leveraged bet on the likely listing gains by resorting to IPO funding. After the closure of the IPO issue, the market registered very sharp declines due to a viral fever engulfing the whole world. Now, the protagonist, who has already lost heavily from the existing portfolio, has to encounter likely losses from the loan-funded IPO investment. He had to hedge the likely losses from the possible listing day losses from the IPO. For this, he needs to put in place a hedging strategy, answering the questions on the choice of derivative contract, size and expiry date of the contract.
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NUK, OILJ, SAZU, UKNU, UL, UM, UPUK
Earlier research indicates that attracting pre-offer investor attention yields long-term benefits to an initial public offering (IPO) issuer. For investors with limited attention, we model a way in ...which firms may attract attention: through underpricing their IPO, and using the expected allocations of underpriced shares to induce investors to attend the road show and consider the offering. Our model generates a novel set of predictions regarding the relationship between initial returns and attention, retention, expansion, and the benefits of attention, plus the asymmetry of the relationship with attention. Consistent with our model, investors’ attention is positively related to both initial returns and the magnitude of price revision. The relationship between attention and underpricing is asymmetric, and stronger when ex ante uncertainty is greater. Our work has implications regarding direct listings, is consistent with partial adjustment to public information, explains the relative unpopularity of gray market/when-issued trading and predicts that, even if the JOBS Act leads to more active pre-IPO trading (through crowdinvesting/equity crowdfunding), underpricing will still occur.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
By using institutional trading data in a sample of US IPOs, I provide evidence that IPO syndicate banks use their affiliated institutional investors to build a relationship with IPO lead underwriters ...and boost their underwriting business. First, I show that investment managers provide unprofitable price support in the aftermarket of IPOs in which their parent banks are non-lead syndicate members. This costly support is concentrated in cold IPOs and IPOs net sold by independent institutions. Second, I show that lead underwriters are more likely to select in the IPO syndicate the banks whose affiliated institutional investors support IPO prices. I discuss and document evidence of the incentives of underwriters and affiliated institutions that make price support emerge in equilibrium.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
10.
On modeling IPO failure risk Colak, Gonul; Fu, Mengchuan; Hasan, Iftekhar
Economic modelling,
April 2022, 2022-04-00, Volume:
109
Journal Article
Peer reviewed
Open access
This paper offers a novel framework, combining firm operational risk, IPO pricing risk, and market risk, to model IPO failure risk. By analyzing nearly a thousand variables, we observe that prior IPO ...failure risk models have suffered from a major missing-variable problem. Evidence reveals several key new firm-level determinants, e.g., the volatility operating performance, the size of its accounts payable, pretax income to common equity, total short-term debt, and a few macroeconomic variables such as treasury bill rate, and book-to-market of the DJIA index. These findings have major economic implications. The total value loss from not predicting the imminent failure of an IPO is significantly lower with this proposed model compared to other established models. The IPO investors could have saved around $18billion over the period between 1994 and 2016 by using this model.
•Analyze IPO failure models using machine learning (ML) tools.•Model includes a combination of IPO pricing, operational, and markets risks.•Use nearly a thousand variables and report several new predictors of IPO failure risk.•This ML model is significantly more robust compared to other known models.•Use of this model could save IPO investors over $18 billion over the sample period.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
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