Time Of Initial Public Offering Research Articles

Analysis of Factors with Underpricing of Indonesia’s Borse in the Initial Public Offering (IPO) Period 2019-2021

The aim of this study is to find out how great the influence of Underwriter Reputation, Company Age, Return on Asset (ROA), and Financial Leverage (DER) on the rate of Underpricing of Shares listed on the Indonesian Stock Exchange at the time of Initial Public Offering (IPO) in the period 2019-2021. To test this, the researchers used quantitative methods with secondary data collection techniques such as prospectus reports and corporate finances as well as literature studies. Analysis techniques used using E-views version 9. The results of research and discussion found that Reputation Underwrite, Return on Asset, and Financial Leverage did not affect the rate of Underpricing of Shares, whereas Age of the Company had an influence. So together the four Independent variables only affect the dependent variable by 12.44 percent.

Corporate culture and IPOs

AbstractThis study documents corporate culture at the time of initial public offering (IPO) and the relationship between corporate culture at the time of IPO and firm financial performance. Based on a sample of 1157 US firms that went public between 1996 and 2011 and performance information through 2016, the data provide strong evidence that regional culture, industry characteristics, and pre‐IPO financing play key roles in explaining a firm's cultural orientation. Moreover, the data indicate that IPO firms with a highly competition‐ and creation‐oriented culture experience higher profitability and less risk of financial distress than other IPO firms.

Timeliness of technological innovation and decisions of IPO timing and pricing

This study builds a theoretical model, empirically testing the impact of timeliness value of technological innovation on initial public offering (IPO) timing and underpricing based on Chinese IPO. And a posteriori study is conducted from the two perspectives of growth value and competitive value in the product market after IPO. The results are as follows: (1) The greater the timeliness value of technological innovation, the more likely firms will go public early.(2) When firms go public early, the timeliness value of technological innovation will affect the ceiling of IPO underpricing that firms can bear, which means that the timeliness value of technological innovation is positively correlated with the degree of underpricing. (3) For firms that go public early with high IPO underpricing, the timeliness of technological innovation has a greater positive effect on the growth performance and competitiveness in the product market after IPO. Therefore, timeliness of technological innovation is more likely to be involved in firms’ decisions of going public early with high underpricing.

Why Unicorns Exist: Venture Scaling and the Valuation and Timing of Startup IPOs

The number of “unicorns” worldwide—private VC-funded startups valued at a billion dollars or more—has risen dramatically in recent years. Since the main alternative to becoming a highly valued private company is to undertake an initial public offering (IPO), we relate the growth in unicorns to startups’ decisions to delay IPOs and only undertake them at high valuations. We focus on highly scalable ventures as an explanation for unicorns and examine how scalability, in combination with VC funding availability, affects IPO valuation and timing. We posit that becoming a public firm may have significant drawbacks for highly scalable ventures in executing their growth strategies, which may induce them to undertake IPOs later and at higher valuations, especially when more VC funding is available. Among U.S. VC-backed IPOs during 2010-2019, we find evidence that is largely supportive of our propositions. We contribute to the emerging literature on venture scaling and provide an explanation for the recent rapid growth of unicorns.

Factors Affecting Underpricing Level during IPO in Indonesia Stock Exchange 2018 - 2019

The underpricing is an event that occurs when stock price in a primary market is smaller than that on secondary market. Indonesia has an increase of companies that experience underpricing every year, although there was a decline in 2019/ Yet, the decline was not significant. The purpose of the study was to determine the effect of factors such as company age, company size, and return on assets, financial leverage, earnings per share and current ratio on level of underpricing at the time of Initial Public Offering (IPO) on the Indonesia Stock Exchange for the period 2018-2018. This research was conducted on the companies that did an IPO on the IDX for the period 2018-2019 using method purposive sampling. There were 82 companies used and the method used was multiple linear regression analysis using SPSS software. The results showed that company size and earnings per share have a negative effect on the level of underpricing. However, the company age, return on assets, financial leverage and current ratio have no effect on the level of underpricing. This research expected to provide benefits to related parties, including for investors. Investors can consider the value of earnings per share and the size of the company when making investment. for issuers companies need to pay attention to value of Earning Per Share and the size of the company so it avoid underpricing and get expected profit for the company.

The Return on IPO Stocks during the COVID-19 Pandemic in Indonesia

Abstract. Conducting an initial public offering (IPO) during the COVID-19 pandemic is not easy due to the current high level of economic uncertainty. This study aims to examine the effect of the COVID-19 pandemic on the initial return on IPO shares in Indonesia. In the study, a cross-sectional regression was applied, using a sample of 51 companies that conduct IPOs. It was found that the fear index over the COVID-19 pandemic negatively affected the initial return. The higher the fear index, the lower the return on IPO stocks on the first listing day. The results therefore demonstrates that the fear of COVID-19 influenced the IPO market return in Indonesia. This study extends the literature on the COVID-19 pandemic, especially on the initial return on IPOs. Practically, this research also provides insight into the issuers regarding the appropriate timing of IPOs during the crisis, particularly for investors who wish to buy IPO shares during an uncertain time. Policymakers are expected to mitigate the cases and deaths of COVID-19 in Indonesia, which may reduce investors’ fear related to COVID-19. This paper's limitation is that it only examines data from 2020, as this was the year in which COVID-19 first announced. Future research could include the short-term and long-term performance of IPOs, and also broaden the sample area to a larger region. Keywords: Initial return, IPO, COVID-19, fear index, Indonesia

Comparative Analysis of Factors Affecting the Underpricing Level of Sharia and Non Sharia Stocks at the time of Initial Public Offering

Underpricing is a condition where the stock price of a company when conducting an Initial Public Offering (IPO) is below the stock price when it is on secondary market. In Indonesia, stocks are divided into two types, namely Sharia stock and non Sharia stock. This study aims to determine the effect of underwriter reputation, investment risk, profitability, financial laverage, and company size on the level of underpricing of Sharia stock and non Sharia stock. The sampling technique used was purposive sampling. The analytical method used is linear multiple regression with the type of cross section data. The results of the study found that there are differences that effect the underpricing of Sharia stock and non Sharia stock. In Sharia stock, underpricing is only influenced by financial laverage, while in non Sharia stock underpricing is influenced by investment risk and company size. This study provides an overview to investors who have the aim of investing in companies that are IPOs for profit so that they carefully consider the influence of underwriter variables, investment risk, company size, financial laverage, and profitability. For companies, this research provides an overview to companies in order to make the right decisions in offering optimal stock prices. And for further researchers,

Who does the media love? A qualitative content analysis of the narratives of founders and nonfounders in IPO firms

PurposeResearchers have investigated the distinctions between founder and nonfounder chief executive officers (CEOs) for different performance variables. Researchers have also investigated the use of media as supplemental information that investors review to make decisions about initial public offering (IPO) firms. Research that investigates founders and nonfounder CEOs of IPO firms in the media is limited but growing. This paper aims to explore how founder and nonfounder CEOs' narratives are portrayed differently in business media following an IPO.Design/methodology/approachUsing insights from the narrative paradigm, 1,057 news paragraphs about CEOs from 19 matched pairs (38 firms) were content analyzed using a contrasting coding strategy.FindingsFounders and nonfounders' narratives differ in three ways. Specifically, founder CEOs are more likely to (1) have their personal background detailed in the media, (2) translate technical business information to easy-to-understand general language and (3) be quoted talking about positive information than nonfounder CEOs.Research limitations/implicationsThe results of this study show the media's role in creating narratives about management and how the experiences of founders and nonfounders are represented differently in the media. The study is limited by only investigating media articles about CEOs and not investigating the entire organizational narrative.Originality/valueThis study adds to the growing literature that investigates the role the media plays in portraying management in the media at time of IPO.

Pricing Constraint and the Complexity of IPO Timing in the Stock Market: A Dynamic Game Analysis.

The timing of an initial public offering (IPO) is a complex dynamic game in the stock market. Based on a dynamic game model with the real option, this paper investigates the relationship between pricing constraint and the complexity of IPO timing in the stock market, and further discusses its mechanism. The model shows that the IPO pricing constraint reduced the exercise value of the real option of IPO timing, thus restricting the enterprise’s independent timing and promoting an earlier listing. The IPO price limit has a stronger effect on high-trait enterprises, such as technology enterprises. Lowering the upper limit of the pricing constraint increases the probability that enterprises are bound by this restriction during IPO. A high discount cost and stock-market volatility are also reasons for early listing. This paper suggests a theoretical explanation for the mechanism of the pricing constraint on IPO timing in the complex market environment, which is an extension of IPO timing theory, itself an interpretation of the IPO behavior of Chinese enterprises. These findings provide new insights in understanding the complexity of IPOs in relation to the Chinese stock market.

Information arrival, delay, and clustering in financial markets with dynamic freeriding

We study informational freeriding in a model where agents privately acquire information and then decide when to reveal it by taking an action. Examples of such freeriding are prevalent in financial markets, e.g., the timing of initial public offerings, analysts’ forecasts, and mutual funds’ investment decisions. The main results show that, in large populations, few agents provide significant information while the vast majority of agents freeride. We highlight the role of uncertainty and market size in shaping the dynamics of price discovery. Among other results, we find that heightened uncertainty over the underlying state enhances information production, yet weakens the precision and speed of information aggregation in the market.

THE ROLES OF INSTITUTIONAL INVESTORS IN THE FAILURE OF NEWLY PUBLIC STOCKS

AbstractIn this article, we study two negative events that can happen to newly public stocks: (1) the price drops at least 50% from the closing price on the first trading date within one year after the initial public offering (IPO) (initial failure) and (2) the firm is delisted for negative reasons within three years after the IPO (final failure). We find that high investor sentiment at the time of IPO can lead to both initial failure and final failure of IPO firms, whereas monitoring by external professionals plays a more important role in averting final failure than initial failure. Exploring the roles of different types of institutional investors, we find that transient (i.e., short‐term trading) institutions sell before initial failure. In contrast, dedicated (i.e., monitoring) institutions focus on long‐term performance and may stay with stocks suffering temporary initial failure, but their selling typically signals the imminent final failure of newly public firms.

The Roles of Institutional Investors in the Failure of Newly Public Stocks

In this article, we study two negative events that can happen to newly public stocks: (1) the price drops at least 50% from the closing price on the first trading date within one year after the initial public offering (IPO) (initial failure) and (2) the firm is delisted for negative reasons within three years after the IPO (final failure). We find that high investor sentiment at the time of IPO can lead to both initial failure and final failure of IPO firms, whereas monitoring by external professionals plays a more important role in averting final failure than initial failure. Exploring the roles of different types of institutional investors, we find that transient (i.e., short-term trading) institutions sell before initial failure. In contrast, dedicated (i.e., monitoring) institutions focus on long-term performance and may stay with stocks suffering temporary initial failure, but their selling typically signals the imminent final failure of newly public firms.

Credit crunch and timing of initial public offerings

We find that firms with more outstanding short-term debt are more likely to go public in bear markets than firms with less short-term debt. Importantly, this finding is evident for firms going public after a reduction of total bank credits in the loan market. Bear market IPOs repay more short-term debt during the IPO year than other IPOs do, and have lower offering prices and proceeds. These results suggest a credit crunch significantly affects the timing and costs of IPOs when firms owe significant short-term debt.

Differentiation Strategy and Performance of New Venture in the Context of IPO

This study examines the role of new ventures’ differentiation strategy on their short- and long-term performance at the time of IPO (initial public offering) and during post-IPO stages. New venture...

THE TIMING OF INITIAL PUBLIC OFFERINGS – NON-NUMERICAL MODEL BASED ON QUALITATIVE TRENDS

The objective of this study is to develop a qualitative model supporting chief financial officers (CFOs) while considering the timing of initial public offerings (IPOs) under conditions of underdeveloped capital markets, where decision making is often made under information shortage. A lack of adequate statistical data in connection with turbulently changing environment suggests that additional research is needed to develop new IPO timing models based not only on statistical analyses. We used a qualitative research approach based on trends, which are increasing, constant or decreasing. Firstly, we identified key variables influencing IPO timing, which have sufficient support in the relevant IPO academic literature, e.g. GDP growth rates, level of compliance, stock market returns, etc. Next, a qualitative model working with 9 variables was developed. The result is represented by 19 scenarios and their qualitative solutions. The transitional graph represents all possible transitions among the 19 scenarios. The main message of the findings presented is what scenarios can occur and what actions might be implemented by CFOs in order to increase the chances of IPO success. We believe that our findings provide valuable implications for local issuers, investment bankers, stock exchanges and macroeconomic policy makers.

Credit Crunch and Timing of Initial Public Offerings

We show evidence that firms with more outstanding short-term debt are more likely to go public in bear markets than firms with less short-term debt. Importantly, this finding is evident for firms going public after a reduction of total bank credits in the loan market. The result is robust to control for endogeneity concerns, selection biases, and alternative stories. Bear market IPOs repay more short-term debt during the IPO year than other IPOs do, and have lower offering prices and proceeds. Those results suggest that a credit crunch significantly affects timing and costs of IPOs.

Initial public offering and financing of biotechnology start-ups: Evidence from Japan

This study explores the initial public offering (IPO) and financing of biotechnology start-ups in Japan. Using a unique data set, we find that biotechnology start-ups initially backed by venture capital (VC) firms and those originating from universities are more likely to go public within a shorter period. Moreover, we find that neither staged financing nor syndication by VC firms is associated with higher IPO value relative to investment. Furthermore, we provide evidence that the timing of IPOs does not depend on equity market conditions in the biotechnology industry, whereas IPO value tends to depend on equity market conditions. We discuss the factors that explain these findings, which contradict findings in previous studies of VC investments.

PENILAIAN SAHAM PT PEMBANGUNAN PERUMAHAN PROPERTI DALAM RANGKA INITIAL PUBLIC OFFERING

This research aimed to estimate fair value per share of PT Pembangunan Perumahan Property Tbk. as a comparison value to the offered price, set at the time of Initial Public Offering (IPO). This research also aimed to determine whether the price offered at the time of IPO was undervalued or overvalued. Information used in this research was in the form of secondary data of PT Pembangunan Perumahan Property, the financial report of comparable companies, and stock prices of comparable companies. The analyzing tools used to determine the fair value per share were discounted cash flow method and the relative valuation method. The discounted cash flow method was performed through the projection of the financial statements i.e. the balance sheet and income statement, the projection of Free Cash Flow to Equity (FCFE), determination of the discount rate, determination of terminal value, and determining the estimated value of the equity. The relative valuation method was established by searching, choosing and determining the appropriate multiple of comparable companies in similar business. Multiples used were: Price Earnings Ratio (PER), Price to Book Value (PBV), and Price to Sales Ratio (P/S).

The HR executive effect on firm performance and survival

Research summary: This article replicates and extends Welbourne and Cyr's (1999) pioneering study of the relationship between the presence of human resource executives (HREs) and firm performance in initial public offering (IPO) firms. We employ a larger, more generalizable sample, a model better fitted to the IPO context, and alternative performance measures to execute a more robust examination of this relationship. Using Welbourne and Cyr's model specifications, our results parallel theirs: there is no significant relationship between HREs and firms' post‐IPO financial performance. Moreover, extending Welbourne and Cyr's study, we find that the presence of HREs at the time of firms' IPOs is positively related to the ultimate success measure: post‐IPO firm survival. Additionally, for firms that had executives at the time of IPO, the negative effect of firm size on firm mortality is greater and the positive effect of leverage on firm mortality is smaller.Managerial summary: Does paying attention to HRM help firms to succeed? This study examines that question in a sample of generally small, young firms that went public from 1996 to 2008. Only about 10 percent of these firms had human resource executives (HREs) at the time of their IPOs, allowing us to examine the effects of the presence of HREs on firm performance. While we find that the presence of an HRE at IPO is not related to firms' post‐IPO financial performance, firms that had HREs at IPO are significantly more likely to survive in the long run. Since approximately 20 percent of the sample firms do not survive, this is a very meaningful outcome. Indeed, survival may be the ultimate measure of firm performance. Copyright © 2016 John Wiley & Sons, Ltd.

IPO Waves: How Market Performances Influence The Market Timing Of IPO?

The goal of this paper is to study the impact of stock markets on Initial Public Offerings (IPOs). Several studies have shown that the need for financing is not the main trigger for an IPOfavorable market conditions may play a more important part. This work prove the existence of a significate relationship between past stock market returns and the number of IPOs. Before setting the date for an IPO, managers analyze long term financial market yields, a bullish stock market over a six month/ one year period encourages IPOs activities. In the other hand, even a negative performance but over a two-year period may have the same effect. They expect a stock market inversion. These results were obtained by autocorrelation analysis and count regression.