Initial Public Offerings (IPO)

by Gregoriou

• ISBN13: 9780750679756
• ISBN10: 0750679751
• Format: Hardcover
• Copyright: 2005-12-02
• Publisher: Elsevier Science

Summary

After the cooling off of IPOs since the dot com bubble, Google has rekindled the fire for IPOs. This IPO reader contains new articles exclusive to this reader by leading academics from around the world dealing with quantitative and qualitative analyses of this increasingly popular and important area of finance. Articles address new methods of IPO performance, international IPOs, IPO evaluation, IPO underwriting, evaluation and bookbuilding. Although numerous articles are technical in nature, with econometric and statistical models, particular attention has been directed towards the understanding and the applicability of the results as well as theoretical development in this area. This reader will assist researchers, academics, and graduate students to further understand the latest research on IPOs.

Table of Contents

Preface and Acknowledgments	xiii
About the editor	xv
List of contributors	xvii
Part One Performance of IPOs	1	(138)
1 Nasdaq IPOs around the market peak in 2000	3	(10)
Niklas Wagner
1.1 Introduction	3	(1)
1.2 Literature review	4	(1)
1.3 The Nasdaq IPO dataset	5	(3)
1.4 Nasdaq IPO returns	8	(3)
1.5 Conclusion	11	(1)
References	11	(2)
2 Returns to style investments in initial public offerings	13	(16)
Kojo Menyah and Krishna Paudyal
2.1 Introduction	13	(1)
2.2 Prior studies on investment styles and their returns	14	(1)
2.3 Data, sample, and empirical methods	15	(4)
2.4 Empirical evidence	19	(8)
2.5 Conclusion	27	(1)
References	27	(2)
3 The effect of IPO characteristics on long-run performance of Taiwan's IPOs: evidence from efficiently learning markets	29	(16)
Anlin Chen, Sue L. Chiou, and Chinshun Wu
3.1 Introduction	29	(2)
3.2 Data	31	(1)
3.3 Measuring IPO performance under the efficient markets hypothesis	32	(3)
3.4 IPO performance under efficiently learning markets	35	(5)
3.5 Dependence of long-run performance on issue characteristics	40	(2)
3.6 Conclusion	42	(1)
References	43	(2)
4 Short- and long-run performance of IPOs traded on the Istanbul Stock Exchange	45	(12)
Mehmet Orhan
4.1 Introduction	45	(2)
4.2 IPO performance during different time intervals	47	(3)
4.3 Testing for the structural change of the CAPM at the 2001 economic crisis of Turkey	50	(2)
4.4 Long-run relationship of the CAPM	52	(1)
4.5 Conclusion	52	(2)
References	54	(3)
5 Indexing the IPO sector with IPDX™ Indices	57	(8)
Josef A. Schuster
5.1 Introduction	57	(1)
5.2 Why are IPOs unique? The academic perspective	58	(2)
5.3 IPDX Index methodology	60	(1)
5.4 IPDX Index analytics	61	(2)
5.5 Conclusion	63	(1)
References	64	(1)
6 The size effect of firms going public on the Spanish capital market	65	(16)
Susana Álvarez-Otero and Victor M. González-Méndez
6.1 Introduction	65	(2)
6.2 Database	67	(2)
6.3 Effect of the firm's size on underpricing: long-term performance and the firm's performance	69	(8)
6.4 Conclusion	77	(1)
References	78	(3)
7 Earnings management and the long-run performance of Spanish initial public offerings	81	(32)
Maria J. Pastor-Llorca and Francisco Poveda-Fuentes
7.1 Introduction	81	(1)
7.2 Sample and data sources	82	(3)
7.3 Post-offering stock return performance	85	(4)
7.4 Measuring earnings management	89	(5)
7.5 Earnings management in initial public offerings	94	(6)
7.6 Earnings management and post-offering stock return underperformance	100	(9)
7.7 Conclusion	109	(1)
References	110	(3)
8 IPO initial returns on European 'new markets'	113	(16)
Giancarlo Giudici and Peter Roosenboom
8.1 Introduction	113	(2)
8.2 Review of the literature	115	(1)
8.3 Data and sample description	116	(6)
8.4 Hypothesis and variable measurement	122	(1)
8.5 Empirical results	123	(3)
8.6 Conclusion	126	(1)
References	127	(2)
9 Efficiency of US IPOs: a DEA approach	129	(10)
Greg N. Gregoriou and Maher Kooli
9.1 Introduction	129	(1)
9.2 Data	130	(1)
9.3 Methodology	131	(2)
9.4 Empirical results	133	(4)
9.5 Conclusion	137	(1)
References	137	(2)
Part Two IPO Underpricing: International Evidence	139	(140)
10 Generalizing the winner's curse hypothesis: the case of the Belgian IPO market	141	(18)
Michel Boelen and Georges Hübner
10.1 Introduction	141	(1)
10.2 Data and methodology	142	(3)
10.3 Empirical results	145	(10)
10.4 Conclusion	155	(1)
References	155	(2)
Appendix	157	(2)
11 Flipping activity in fixed offer price mechanism allocated IPOs	159	(18)
Dimitrios Gounopoulos
11.1 Introduction	159	(1)
11.2 Methodology and sample description	160	(1)
11.3 Descriptive results on flipping	161	(10)
11.4 Specification of the models	171	(1)
11.5 Cross-sectional regression results	172	(2)
11.6 Conclusion	174	(1)
References	175	(2)
12 Getting IPO Pricing right: vive la France?	177	(10)
Edel Barnes
12.1 Introduction	177	(1)
12.2 IPO pricing methods	178	(2)
12.3 IPOs and the French stock market	180	(1)
12.4 Study motivations, data, and analysis	181	(2)
12.5 Results and discussion	183	(1)
12.6 Conclusion	184	(1)
References	185	(2)
13 Underpricing and the aftermarket performance of initial public offerings: the case of Austria	187	(28)
Wolfgang Aussenegg
13.1 Introduction	187	(3)
13.2 The new issue market in Austria	190	(1)
13.3 Data description	190	(1)
13.4 Initial returns	191	(8)
13.5 Aftermarket performance	199	(10)
13.6 Conclusion	209	(2)
References	211	(4)
14 The hot-issue period in Germany: what factors drove IPO underpricing?	215	(32)
Stefan Günther and Marco Rummer
14.1 Introduction	215	(1)
14.2 Related research and methodology	216	(6)
14.3 The dataset	222	(2)
14.4 Empirical analysis	224	(18)
14.5 Conclusion	242	(1)
References	243	(4)
15 Reassessing Canadian IPO underpricing: evidence from common share, Capital Pool Company, and unit offerings	247	(16)
Maher Kooli
15.1 Introduction	247	(1)
15.2 Background and hypothesis development	248	(3)
15.3 Data and methodology	251	(2)
15.4 Results	253	(7)
15.5 Conclusion and policy implications	260	(1)
References	260	(3)
16 IPO underpricing and ownership structure: evidence from the Istanbul Stock Exchange	263	(16)
M. Banu Durukan
16.1 Introduction	263	(2)
16.2 Theoretical background	265	(3)
16.3 Sample and data	268	(1)
16.4 Empirical findings	269	(5)
16.5 Conclusion	274	(1)
References	275	(4)
Part Three Corporate Structure and IPO Evaluation	279	(64)
17 IPOs and earnings management in Germany	281	(16)
Tereza Tykvová
17.1 Introduction	281	(2)
17.2 Data	283	(1)
17.3 Methodology of accrual measurement	284	(3)
17.4 Earnings management by fiscal years	287	(3)
17.5 Earnings management and stock performance	290	(3)
17.6 Conclusion	293	(1)
References	294	(3)
18 Signaling and the valuation of IPOs: regression tests	297	(14)
Steven Xiao fan Zheng
18.1 Introduction	297	(1)
18.2 Regression model misspecification	298	(2)
18.3 Simulated regressions	300	(4)
18.4 Correcting the misspecification	304	(4)
18.5 Conclusion	308	(1)
References	309	(2)
19 The role of venture capitalists in IPO performance: empirical evidence from German IPO data	311	(12)
Andreas Hack and Erik E. Lehmann
19.1 Introduction	311	(2)
19.2 Venture capitalists as shareholders and IPO returns	313	(2)
19.3 Data, measurement, and estimation methods	315	(2)
19.4 Descriptive statistics and empirical results	317	(2)
19.5 Conclusion	319	(1)
References	320	(3)
20 Ownership structure and initial public offerings in Portugal	323	(20)
José Miguel Almeida and João Duque
20.1 Introduction	323	(1)
20.2 Reasons and findings around initial public offering patterns	324	(3)
20.3 Data and methodology	327	(3)
20.4 Empirical results	330	(8)
20.5 Conclusion	338	(1)
References	339	(4)
Part Four Bookbuilding, Listing, and Underwriting	343	(88)
21 Bookbuilding and share pre-allocation in IPOs	345	(24)
Nancy Huyghebaert and Cynthia Van Hulle
21.1 Introduction	345	(2)
21.2 Theory and hypotheses	347	(4)
21.3 Sample selection and description	351	(4)
21.4 Empirical results on bookbuilding and pre-allocation decisions	355	(4)
21.5 Effects on underpricing and stock liquidity	359	(4)
21.6 Conclusion	363	(2)
References	365	(4)
22 Costs and benefits in the choice of the audit and underwriting quality in the IPO market: an empirical analysis of competing theories	369	(18)
Joseph Aharony, Ran Barniv, and Chan-Jane Lin
22.1 Introduction	369	(1)
22.2 Contribution to the literature	370	(1)
22.3 Supply-side and demand-side hypotheses	371	(1)
22.4 Data and sample statistics	372	(3)
22.5 Research method	375	(3)
22.6 Results	378	(6)
22.7 Conclusion	384	(1)
References	385	(2)
23 Siamese twins and virtual mergers: dual-listed companies in Australia	387	(12)
Paul Ali
23.1 Introduction	387	(1)
23.2 Dual-listed companies	388	(5)
13.3 Some legal issues	393	(2)
13.4 Conclusion	395	(1)
References	396	(3)
24 Equity issuance trends in Australia's listed investment fund markets	399	(14)
Martin Gold
24.1 Introduction	399	(1)
24.2 Institutional details and market structure	399	(5)
24.3 Supply factors	404	(2)
24.4 Recent issuance trends	406	(1)
24.5 Performance of listed funds sector, including recent fund IPOs	407	(2)
24.6 Return performance of recent listed investment fund IPOs	409	(2)
24.7 Conclusion	411	(1)
Bibliography	411	(2)
25 Do underwriters create value for issuers by subjectively determining offer prices?	413	(18)
Steven Dolvin
25.1 Introduction	413	(1)
25.2 Background	414	(2)
25.3 Data and summary statistics	416	(4)
25.4 Determining offer prices	420	(6)
25.5 Conclusion	426	(1)
References	427	(2)
Appendix: Derivation of the Residual Income Model	429	(2)
Index	431