Number Of Initial Public Offerings Research Articles

Linking Non-Financial Performance Determinants with IPO Underpricing: Evidence from Indonesia

Study Background/Rationale: This study aims to investigate the determinants that may influence the underpricing in Initial Public Offerings (IPO), a phenomenon found in stock exchange markets globally. Underpricing occurs when the intrinsic value is higher than the offer price set by the issuing firm. As a result, the share’s price skyrockets upon its market debut, offering an instant profit to investors, but potential damage to the company itself. Method: The focus of this study is the Indonesian stock market, which is seen as one of the leading growth economies among emerging markets and other developing economies, with accelerated GDP and having topped the list of Southeast Asian (ASEAN) countries regarding the number of IPOs. This research utilises multiple linear regression models and samples of firms that engaged in IPO in the Indonesia Stock Exchange (IDX) between 2018 and 2022. Findings: Using prospectus’ non-financial performance determinants, this study finds that underwriter reputation, public ownership, and firm size have a positive influence on underpricing; additionally, offering size and firm age have a negative and statistically significant influence on underpricing. Furthermore, this study adds to the existing research by emphasising how various determinants are linked to IPO underpricing in Indonesia. In addition, this study demonstrates that prospectuses provide relevant information to minimise information asymmetry and ex-ante uncertainty between firms and shareholders. Conclusion: Considering the present shortage of studies on the determinants of IPOs underpricing as a starting point, this empirical research can be valuable since it could enhance the existing research by providing latest data for comparisons across nations.

The 20th anniversary of the Russian IPO market: analysis and forecast

The Russian stock market is in crisis. The indices of the Moscow Stock Exchange and RTS in February 2022 updated their lows and returned to the values of March 2020. The Russian Federation stock market has never faced a fall of such magnitude in such a short period of time. The favorable situation that prevailed in the financial markets during the pandemic has been nullified. The lockdown and widespread restrictions obviously brought a huge number of individuals to the stock exchange, which allowed the market to recover much faster from the fall in 2020 than after the crises in 2014 or 2018, and the interest of private investors in investments created favorable conditions for the emergence of new companies on the exchange – 15 Russian companies have entered IPO (Initial Public Offering) over the past 2 years. But in the current conditions of growing geopolitical tensions and another collapse in the stock market, the problem of reducing the number of IPOs again comes to the fore. The article discusses the key aspects of the development of the IPO market in Russia, and provides a forecast for upcoming placements.

Efficient predictability of oil price: The role of number of IPOs and U.S. dollar index

We find the number of initial public offerings (NIPO) a simple but efficient oil price predictor, and provide new evidence that U.S. dollar index (USDX) also has significant out-of-sample forecasting power on oil price. Furthermore, we reveal the highly complementary relation between NIPO and USDX in forecasting oil price and explain it from the points of linear correlation and economic transmission mechanism. With the help of multivariate prediction methods, both the statistical and economic performance of NIPO and USDX can be tremendously boosted. The oil predictabilities of NIPO and USDX partially stem from the forecasting power on oil market sentiment and inflation, respectively, and they can be further enhanced using appropriate nonlinear model.

Macroeconomic Factors and Initial Public Offerings in Brazil

The strategy of going public plays a relevant role in business growth. Macroeconomic conditions are decisive for initial public offerings (IPOs). In this study, we analyzed the impact of macroeconomic factors on IPOs in the Brazilian stock market, considering the period from 2007 to 2018. We used autoregressive distributed lag (ARDL) models to analyze the existence of cointegration between the variables and the long-run effects. The estimated models considered the effects on the proceeds or the number of IPO, which can be related to interest rates, stock market returns, economic activity, and economic uncertainty. Our results indicate that economic activity and uncertainty have long-run effects on both the proceeds and the number of IPOs. There is also evidence that the interest rate has a long-run relationship with the IPO proceeds. In addition, we tested the causal relationships between macroeconomic factors and the IPO variables. For this purpose, we adopted a Granger causality test. We highlight that uncertainty precedes the IPO proceeds. Expectations about macroeconomic conditions are relevant for the decision to go public. Our evidence can provide guidance for stakeholders and policymakers.

What causes hot markets for equity IPOs? An analysis of initial public offerings in the Netherlands, 1876–2015

AbstractThis paper explains fluctuations in the number of initial public offerings (IPOs) between 1876 and 2015 in the Netherlands. We test an econometric model and find that the number of IPOs is strongly related to the economic growth and the size of the stock exchange. We also find that IPOs are timed to coincide with favorable market conditions. Our model explains almost 50 percent of the fluctuations and most of the hot markets. To further understand IPO waves, we conduct a descriptive analysis, which yields two additional causes for hot markets, i.e., high capital needs and investors’ expectations for specific industries.

Wpływ wybranych zmiennych makroekonomicznych na liczbę pierwszych ofert publicznych – sytuacja polskiego rynku giełdowego

Przedmiot badań: Analizie poddano wpływ zmiennych makroekonomicznych na liczbę pierw­szych ofert publicznych (IPO). Poszczególne wskaźniki ogólnogospodarcze oddziałują na rynek giełdowy w różny sposób. Zróżnicowane są także wyniki badań biorących pod uwagę ich wpływ na liczbę debiutów giełdowych przeprowadzanych w różnych krajach. Wobec tego zdecydowano się przeprowadzić analizę w tym zakresie, skupiając się na Giełdzie Papierów Wartościowych w Warszawie (GPW), pośrednio starając się sprawdzić, czy wyniki badań zagranicznych znajdują odzwierciedlenie w sytuacji polskiego rynku.
 Cel badawczy: Głównym motywem podjęcia badań była weryfikacja wpływu wybranych wskaź­ników makroekonomicznych na liczbę IPO. Celowi temu podporządkowano następujące hipo­tezy badawcze: stopa wzrostu PKB pozytywnie wpływa na liczbę debiutów giełdowych, stopa procentowa negatywnie oddziałuje na tę zmienną, wzrost stóp zwrotu z Warszawskiego Indeksu Giełdowego (WIG) przyczynia się do wzrostu liczby IPO.
 Metoda badawcza: Empiryczna weryfikacja wpływu zmiennych makroekonomicznych na licz­bę IPO przeprowadzona została z użyciem modeli regresji liniowej. Dla modeli rocznych estyma­cja przebiegała Metodą Najmniejszych Kwadratów (MNK), zaś w przypadku kwartalnych – także Uogólnioną Metodą Najmniejszych Kwadratów (UMNK), w celu uniknięcia heteroskedastycz­ności reszt. Analizie poddano liczbę IPO w latach 2005–2019, objaśniając ją wskaźnikami (stopą wzrostu PKB, stopą referencyjną NBP, stopą rentowności 10-letnich obligacji skarbowych stopą zwrotu z WIG) opóźnionymi o 1 okres.
 Wyniki: Stopa zwrotu z WIG istotnie, pozytywnie oddziaływała na liczbę debiutów giełdo­wych w kolejnym okresie zarówno w ramach modeli rocznych, jak i kwartalnych. W przypadku pozostałych zmiennych ich istotny wpływ na liczbę IPO zaobserwowano jedynie w przypadku modeli kwartalnych. Stopa wzrostu PKB wykazywała dodatnie powiązanie z liczbą debiutów giełdowych, co zgadza się z postawioną wcześniej hipotezą, podobnie jak w przypadku stóp zwrotu z WIG. Pozytywne oddziaływanie na liczbę IPO zanotowano też w przypadku referen­cyjnej stopy procentowej – wynik ten różnił się natomiast od oczekiwanego. Abstrahując od rezultatu badania, można wskazać też na celowość wykorzystywania modeli przygotowanych nie tylko w oparciu dane roczne, ale także i kwartalne, w przypadku badania wpływu zmien­nych makroekonomicznych na liczbę IPO.

The Variability of IPO Issuance: Evidence from Pakistan Stock Exchange

The present study intends to explore the inducing factors for going public in the emerging market of Pakistan from 2000 to 2018. This study used ordinary least square (OLS), stepwise regression, robust regression and quadratic model to achieve the objectives. The findings revealed that inflation, gross domestic product (GDP) and political stability were positively significant, whereas lending interest rate and underpricing were negatively significant in explaining the number of initial public offerings in Pakistan, as supported by the empirical evidence. Furthermore, the weak macroeconomic factors indicated unfavourable development in the capital market of Pakistan. Concurrently, low confidence for both potential issuers and investors could be seen in fewer IPO activities due to the country’s weak macroeconomic indicators.

The Exit Behavior of Private Equity Firms in Eastern Europe: An Empirical Analysis of the Main Exit Strategies

The author examines the two main exit routes preferred by private equity funds, initial public offerings (IPOs) and mergers and acquisitions (M&amp;A), using quarterly data for Eastern European countries and covering the period 2000–2014. This article follows the work of Black and Gilson (1998), who confirmed the existence of a positive correlation between the number of IPOs (in year <i>t</i>) and the willingness of institutional investors to allocate funds to private equity firms (in year <i>t</i> + 1). Additionally, this article studies M&amp;A as a second exit strategy for private equity investors by mobilizing the economic techniques that are used in time series analysis. The results show that Eastern European private equity firms prefer M&amp;A exits followed by IPOs. The Granger causality test shows the existence of a unidirectional causality of the number of M&amp;A to the volume of private equity investments in Eastern Europe. <b>TOPICS:</b>Private equity, emerging, statistical methods, performance measurement

IPO’s Underpricing: Trends, Determinants and Role of Underwriters

In this study, we examine the trends of the initial public offering (IPO) market, a relationship between the composition of underwriters and size of firms and determinants of underpricing in small, medium and large firms. The sample data period is from November 2003 to March 2018. We have found that large firms have been deploying book-running lead managers (BRLMs) twice as much as in medium and small firms. Similarly, the total number of underwriters in IPOs of large firms are found to be more than small and medium size IPOs. However, uses of syndicate services do not seem to have much difference among all categories of the firms. The IPOs are growing in terms of number of IPOs, size of IPOs (fund raised) and the average size of IPOs. Offer subscription has been found to be a common determinant to explain underpricing across the categories. It can be concluded that advertisement seems to reduce information asymmetry in a large market but does the opposite in a medium-sized market. Age of public firms can reduce the information asymmetry, but statistical shreds of evidence have been found only in case of large-sized firms. For medium-sized firms, BRLMs can help to reduce information asymmetry and consequently have low underpriced IPO offer.

Venture capital, innovation, and growth: evidence from Chinese metropolitan data

ABSTRACTUsing panel data from 282 Chinese cities from 2003 to 2015, we estimate the impact of venture capital (VC) on innovation, employment, and payroll in metropolitan areas. Controlling for endogeneity, VC investments are significantly positively related to metropolitan innovation, employment, and payroll in a fixed effects panel regression and dynamic GMM estimation. Using the number of IPOs (Initial public offerings) in the city as an instrumental variable to again control for endogeneity, VC remains significant. Our results show that VC is significantly contributing to the metropolitan economy as a whole by supporting innovation, creating jobs, and generating wealth in the local cities.

An Industry update: the Latest Developments in Therapeutic Delivery

The present industry update covers the period 1 October–31 October 2017, with information sourced from company press releases, regulatory and patent agencies as well as scientific literature. While the corporate news in October was traditionally dominated by the announcement of the third quarter results, with most of them showing market and revenue growth but also an increasing number of initial public offerings after years of slower financial development, we also saw trends continuing toward an increasing number of convergences of drugs with nanotechnology, devices and 21st century information technology. Whether it is using E Ink's ‘Smart Patch’, AstraZeneca's autoinjector, Elektrofi's Elektroject suspensions or NanOlogy's NanoPac, there is an ever increasing number of combinations dof devices, drugs and applications reaching, more and more the clinic and the market. Controlled release is another feature increasingly addressed by many of the above innovations. For example, the drug-loaded x-ray imageable microscopic beads that have been developed by researchers at UCL Cancer Institute (London, UK) take this one step further in order to pursue local, controlled and in situ validated local delivery.

Industry networks and IPO waves

Abstract We offer a new perspective on why initial public offerings (IPOs) occur in waves and propose that the customer-supplier relationships among industries help propagate IPO waves. Our empirical tests provide evidence that demand shocks increase the number of IPOs in an industry. The shocks then spread upstream through customer relationships leading to an increase in the number of IPOs in more central and connected industries. These findings contribute to the IPO literature by demonstrating the channel through which IPO waves propagate.

The Predictive Value of Investor Sentiment Index on the Volatility of the Malaysian Stock Market

Motivated by evidence that excess volatility could not be explained by the present standard value efficient market models coupled with the irrational behavioural anomaly observed in the Malaysian stock market, this study aims to construct the investors’ sentiment index. The measure is intended to test whether the excess volatility may be contributed by non-fundamental factors. The index includes five proxies: stock market turnover, the number of initial public offerings, IPO initial returns, advancer decliner’s ratio, and the widely applied consumer sentiment index. Factor analysis is employed to identify the common underlying factors from the suggested proxies to construct a composite index. The results suggest that the index is a reliable tool that is able to predict the volatility of the Malaysian Kuala Lumpur Composite Index (KLCI). These findings may be applied by practitioners to assist in making investment strategies, and, in addition, to an alternative paradigm in the asset pricing model. Keywords: Investor Sentiment, Stock Market Volatility, Behavioural Finance, Malaysian Stock MarketJEL Classification: E22, F30

Issuing bonds, shares or staying private? Determinants of going public in an emerging economy

The Warsaw Stock Exchange is one of Europe’s largest exchanges by the number of initial public offerings. In this study, we use a large data-set to explore firms’ decisions to issue equity on the main or alternative market, and debt on the bond market. We observe that, in general, larger, more profitable firms are more likely to go public, although in contrast to developed economies these firms tend to be younger. Moreover, we find that current market valuation positively affects the decision to go public on the main market, and we establish that highly leveraged companies are more likely to issue either shares on the alternative market or bonds. At the same time, however, we observe that firms issuing shares on the alternative market are most likely to manipulate their profitability prior to going public.

Crisis Conditions and Performance of IPO Firms: Impact of Founder-CEOs and Foreign Listings

IntroductionPeriodically, there exists a publicly-traded company that has the good fortune to have an entrepreneurial, visionary CEO that generates long-lasting, organic growth (Joel Shulman, Forbes, 2012).ENTREPRENEURS WHO ARE SUCCESSFUL IN growing their firm and securing financing for making an initial public offering (IPO) face the likelihood that they will be replaced by a professional manager (Wasserman, 2003). The literature shows that founders are replaced due to particular firm characteristics such as exceptionally high or low firm growth, the founder's functional background, and ownership structure (Boeker and Karichalil, 2002). Yet, entrepreneurs who are not replaced and become founder-CEOs of a publicly traded company tend to perform better than non-founders in the IPO process (Gao and Bain, 2011; He, 2008; Mousa and Wales, 2012; Nelson, 2003). Although founders do perform better in IPOs, little is known about how market conditions play a role in the relationship between founder and non-founder-CEO performance in IPOs.Market conditions have been indicated to affect multiple aspects of IPOs such as the number of IPOs being made (Pastor and Veronesi, 2005). Furthermore, investor sentiment changes with environmental conditions (Barberis et al., 1998). Investors are subject to representativeness, generalizing about a person or phenomenon with minimal information (Busenitz and Barney, 1997), as well as periods of conservatism and overconfidence (Barberis et al., 1998) depending on environmental conditions. It is reasonable to believe that changing market conditions and investor sentiment influence how founder-CEOs are received. Therefore, this paper seeks to address how varying environmental conditions affect IPO firm performance for founder and non-founder-CEOs.Investors, both individual and institutional, receive information about IPOs from various sources including financial analysts, investment banks (He, 2007), the media (Pollock and Rindova, 2003), prospectuses, company-released information, and other outlets. All information received forms a set of narratives in investors' minds about an IPO company. Narratives that we experience are how we make sense of and gain meaning (Weick and Browning, 1986) from our environment. Therefore, the narrative paradigm that considers how people deduce reality from a series of stories (Stutts and Barker, 1999) can help explain the reasons why investor sentiment changes towards founder and non-founder CEOs of IPO firms in different environmental conditions.Culture and origin also influence how narratives are formed and perceived. Therefore, narratives across cultures need to be considered in the relationship between founder-CEOs and IPO performance. Most often, researchers remove foreign IPOs from their studies and examine one particular market's (usually the United States) domestic IPOs (i.e. Gao and Bain, 2011; Mousa and Wales, 2012; Nelson, 2003). It is important to consider both domestic and foreign IPOs together because foreign listings are prevalent (Doidge et al., 2004) and increasing around the world. How environmental conditions play a role in the reception of foreign stocks with founder and non-founder CEOs also needs to be better understood so that management can time and strategize their public offering accordingly.To analyze different environmental conditions, two-year increments surrounding and during the 2007-2008 financial crisis will be examined. Precrisis, crisis, and two post-crisis periods will also be reviewed. Analyzing IPO performance in distinct market stages will indicate which characteristics determine success in each stage and how certain factors become more or less important over time.The motivations for conducting a study about founder-CEOs in domestic and foreign firms before, during, and after the most recent stock market crisis are both academic and practical. From an academic standpoint, a growing literature stream is interested in understanding how management influences the IPO process. …

Basileia III: Impacto para os Bancos no Brasil

RESUMO Este artigo avalia os possíveis impactos decorrentes da mudança do capital requerido dos bancos no Brasil, com a implantação do Acordo de Basileia III. Para tanto, foi utilizada uma amostra de 58 bancos, que compreende 80% dos ativos do Sistema Financeiro Nacional, segundo os balanços de dezembro de 2012. A metodologia adotada simulou a necessidade de capital regulatório que será exigida ao final do período de transição, em 2019, considerando a continuidade dos ativos ponderados pelo risco (APR) contido nesses balanços. Assumindo que alguns bancos irão recorrer ao mercado de capitais para elevar sua capitalização, foram analisados os retornos sobre o patrimônio (return on equity - ROE) nos últimos três anos, comparados ao custo de capital próprio, estimado pelo modelo internacional de precificação de ativos de capital (international capital asset pricing model - ICAPM). Constatou-se que 23 instituições apresentaram algum tipo de desenquadramento ao novo capital regulatório, dentre as quais os 3 maiores bancos públicos federais. Verificou-se, também, que 39 bancos apresentam ROE insuficiente para atrair novos investidores. A análise conjunta da adequação da estrutura de capital e do nível de retorno pode identificar eventuais vulnerabilidades. Conclui-se que a implantação do Acordo de Basileia III no Brasil pode intensificar a busca por maior eficiência e lucratividade. Em um futuro cenário, o sistema bancário brasileiro pode observar uma onda de fusões e aquisições e o crescimento do número de ofertas públicas iniciais (initial public offerings - IPOs).

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.

EUROPEAN IPO MARKET. GLOBAL AND REGIONAL STOCK EXCHANGES.

Purpose. This article provides analysis of the European Initial Public Offerings (IPO) market which is one of the biggest of the Global IPO markets. IPO provides a stock market launch, when shares of stock of a company are introduced to public at a stock exchange for the first time. IPO is an important source of finance resources for rapidly developing companies and a key step for them to become mature. Recent economic crisis has changed the landscape and the practice of IPO that should be reconsidered either from an investors point of view or from the company heading to the IPO. The article is also focused on identifying the roles of global and regional stock exchanges using example of development of London and Warsaw stock exchanges.Methodology. The article provides quantitative analysis of selected top performing European stock exchanges official reports and analytical papers of key audit and consulting experts. It is particularly focused on a number of IPO’s, volume of raised capital by year and by stock exchange within the period preceding the financial crisis of 2007-2008.Results. The article shows changes in the European IPO dynamics and change of roles of the European stock exchanges in post financial crisis. In particular it shows the growth of importance of the regional stock markets in the European stock exchange ecosystem and Warsaw Stock Exchange (WSE).Practical implications. Recent economic crisis has changed the landscape in the practice of making IPO’s. Company heading to IPO should take changes on the IPO market seriously and take regional IPO opportunity into consideration. Presented results could help to streamline IPO plans. Results could be of interest to investors to have a more detailed look at the highly performing regional stock exchanges.Value/originality. This article studies are based on the most current data collected by the author from the various stocks reports and the most respectable audit and consulting companies. Analysis and graphic materials are produced by the author.DOI: http://dx.doi.org/10.5755/j01.em.18.4.5726

THE IMPORTANCE OF THE DEPTH OF THE CAPITAL MARKET ON INTERNATIONAL VENTURE CAPITAL AND PRIVATE EQUITY ALLOCATION DECISIONS: THE CASE OF POLAND

This paper addresses the issue of international Venture Capital and Private Equity allocation. The study provides a discussion of the key parameters that determine the international allocation process of private equity funds. This article aims to assess the impact of the depth of the stock market in Poland on international venture capital and private equity allocation decisions. The purpose of this paper is also to focus on the investigation of venture capital and private equity investment trends in Poland. The research methods used are based on systematic and comparative analysis of scientific literature, logical analysis and synthesis, and the analysis of statistical data and results of a questionnaire-based survey. The statistical data used in the article has been based on publications of the Polish Private Equity Association and reports of the European Private Equity and Venture Capital Association (EVCA). The information contained in EVCA reports was based on „PEREP Analytics” data. „PEREP Analytics” is a centralised, non-commercial pan-European private equity database. The „PEREP Analytics” statistics platform monitors the development of pri­vate equity and venture capital in 25 European countries. The article reveals that Poland is similar to the other Central and Eastern European countries with respect to the ratio of private equity investment to gross domestic product (GDP), but there is a major difference which ultimately leads to its attractiveness: this is the size, number of initial public offerings (IPO) and capitalization of the Warsaw Stock Exchange. The total number of IPOs (105) which took place in Warsaw represent 40% of all IPOs in Europe in 2012. The total value of IPOs (EUR 731 million) ranked the WSE in fifth position among those exchanges operating in Europe’s most developed capital markets. Research results indicate that in Poland the second most common exit route for PE funds was divestment by public offering - €36.7m in 2011. The results will be useful to fund managers in improving their private equity allocation decisions in Central and Eastern Europe. The study focuses on the most recent period of development of the VC/PE market in Poland. DOI: http://dx.doi.org/10.5755/j01.em.18.2.4225

Economies of Scope and IPO Activity in Europe

Initial public offering (IPO) activity in Europe has recently come to a near-halt and, similarly to the US, this decline has been more pronounced among small firm IPOs. Three alternative explanations have been proposed: the economies of scope hypothesis states that getting big fast has become more important, resulting in small firms being acquired; the regulatory overreach hypothesis, which states that small firms are remaining private due to an increase in the regulatory costs borne by publicly traded firms; and the market conditions hypothesis, which states that poor stock market levels have resulted in low IPO volume. Although Europe is characterized by more fragmented regulation and by the existence of second markets with lower compliance costs, we argue that the decline in the number of IPOs is partly attributable to the economies of scope explanation. The Panic of 2008 and the Eurozone crisis of 2011 have also temporarily depressed IPO volume, consistent with the market conditions hypothesis. We present evidence of an increased difficulty for small firms to remain profitable, their underperformance, and their higher propensity to be acquired soon after the IPO, relative to large firms. We document that these patterns persist even among second market IPOs, where the regulatory overreach hypothesis does not apply. Controlling for the impact of market valuations, we investigate IPO activity in a time-series setting and unveil a downward trend in European IPOs over time.