Empirical Evidence On Ipo Underpricing

Author : Marius Hamer
Publisher : GRIN Verlag
Page : 73 pages
File Size : 52,6 Mb
Release : 2008
Category : Electronic
ISBN : 9783638903691

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Empirical Evidence on IPO-Underpricing by Marius Hamer Pdf

Diploma Thesis from the year 2007 in the subject Business economics - Investment and Finance, grade: 1,3, European Business School - International University Schlo Reichartshausen Oestrich-Winkel, 80 entries in the bibliography, language: English, abstract: This paper aims at establishing a link between the average level of initial return of IPO shares, existing underpricing explanations and the dot-com bubble. In years prior to the boom of the new economy, underpricing was explained by various theories, which have extensively been developed since decades. However, in the years 1998 to 2001 IPOs were overly underpriced, leading to assumptions about behavioural aspects and investor irrationality. Analysing a comprehensive dataset of 371 IPOs on the Frankfurter B rse between 1997 and 2007, this paper aims at providing evidence that the observed lower levels of initial returns in recent years can indeed be aligned with existing theories on the basis of rational behaviour of market participants. Firstly, the IPO process and its major participants will be presented followed by a review of relevant studies on the IPO phenomenon. In the next step, established underpricing theories are recapitulated. A descriptive analysis of the data sample points out the particularities concerning the company and transaction characteristics of the sample firms. In a last step, a regression analysis relates various proxies for information asymmetry to established underpricing theories. It gives reason to believe that the irrationality at the turn of the century has vanished and that underpricing can again be explained by established theories.

Author : Justyna Dietrich
Publisher : Diplomica Verlag
Page : 81 pages
File Size : 54,8 Mb
Release : 2012-03
Category : Business & Economics
ISBN : 9783842872899

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Variables Influencing the Severity of IPO Underpricing: An Empirical Analysis of the German Market by Justyna Dietrich Pdf

Underpricing refers to the phenomenon of abnormal first-day returns from initial public offerings (IPOs). Without doubt, any US investor would agree that one day-returns of 11.4% on average are exceptional and a worthwhile investment. Since then many studies have proven that it is a persistent phenomenon and also occurs on markets all over the world. The most puzzling question for scientists is why companies are leaving this money on the table and do not set an offering price that reflects the market demand at the offering date. The main focus of this paper is whether and how the findings of past research, primarily conducted for the US market, apply to the German IPO market. As a result, both investors and issuers shall receive practical implications for their decision-making within the IPO process. This study comprises a brief description of some important theoretical aspects that shape the price setting of an IPO. It focuses on business valuation as it is the basis for setting the price of an IPO. Furthermore, the most common price setting mechanisms are explained. Past research results and theories with regard to IPO underpricing will be outlined and put into relation to the upcoming analysis. This also includes the long-run performance of IPOs and deals especially with the question of whether IPOs are systematically overvalued by investors and, if so, why. The empirical analysis consists of a deduction of influencing variables and an applying theoretical model. Finally, OLS results will be presented and interpreted, which also includes practical implications for both, issuers and investors.

Author : Justyna Dietrich
Publisher : diplom.de
Page : 72 pages
File Size : 43,7 Mb
Release : 2011-10-27
Category : Business & Economics
ISBN : 9783842821729

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IPO Underpricing in Germany - Empirical Analysis of Influencing Variables by Justyna Dietrich Pdf

Inhaltsangabe:Introduction: Detected on the US market centuries ago, underpricing is the phenomenon of abnormal first-day returns from initial public offerings (IPOs). Without doubt, any US investor would agree, that one day-returns of 11.4% on average are exceptional and a worthwhile investment. Since then many studies have proven that it is a persistent phenomenon and also occurs on markets all over the world. The most puzzling question for scientists is why companies are leaving this money on the table and don t set an offering price that reflects the market demand at the offering date. Within that, researchers have also been trying to determine the factors that influence the severity of underpricing. Many different explanations with regard to the existence of underpricing have been derived thus far, with all claiming to be valid even if not exclusively. But despite this effort, research so far has not been able to create common sense. Some even argue that underpricing may not exist at all since most IPOs underperform severely in the long-run which leads some people to the conclusion that IPOs are in fact overpriced. The main focus of this paper is whether and how the findings of past research, primarily conducted for the US market, apply to the German IPO market. As a result, both investors and issuers shall receive practical implications for their decision-making within the IPO process. So far, profound underpricing research for the German market has been rather scarce. Most of the available literature concentrates either on dates before 1997 when most offering prices have been determined by using the fixed price mechanism whereas the most recent studies focus on the German stock exchange segment Neuer Markt exclusively. In contrast, this paper aims to give a more recent analysis of underpricing on the German market without distinguishing between different market segments. Additionally, a broad over-view and understanding of IPO underpricing, taking the long-run performance of IPOs into account, will be included. As a result, this paper is structured as follows: The second section consists of a description of some of the important theoretical aspects that have influence on the price setting of an IPO. It will concentrate on business valuation as it is the basis for setting the price of an IPO. Furthermore, the most common price setting mechanisms shall be explained. Additionally, the special role of the lead underwriter in the IPO [...]

Author : Matthias Hetzenecker
Publisher : GRIN Verlag
Page : 76 pages
File Size : 40,7 Mb
Release : 2020-11-19
Category : Business & Economics
ISBN : 9783346299635

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Value creation by private equity-backed IPOs. Underpricing and long-term performance in Germany by Matthias Hetzenecker Pdf

Bachelor Thesis from the year 2019 in the subject Business economics - Review of Business Studies, grade: 1,0, University of applied Sciences Regensburg, language: English, abstract: This paper examines value creation by private equity-backed IPOs. It gives detailed insights on a mostly US-based research topic analyzing 134 German IPOs from 2002 to 2018, of which 49 were identified as PE-backed, and contributes empirical evidence on the discussion of private equity value creation. The empirical results provide detailed information on whether private equity financing can be a suitable financing source for companies by comparing and analyzing the performance differences between IPOs of companies with and without private equity sponsors. Furthermore, the paper provides empirical evidence on the IPO phenomena of underpricing and negative long-term performance for Germany, differentiating itself from former studies in terms of a broader time horizon and an extensive return calculation methodology. Since the locust swarms debate initiated by SPD politician Franz Müntefering, private equity investors have had to struggle with an extremely bad reputation in Germany. Unpopular measures such as company divestures or mass redundancies to achieve set turnover and return targets reinforce the negative image of financial investors. Accordingly, investor and business magnate Warren Buffet criticized that businesses under private equity control become a piece of merchandise. Nonetheless, the private equity industry continues to boom, reaching new records in terms of global business volume and transactions. Under these circumstances and new evolving discussions, it is essential to take a close look at the business model of private equity firms and to analyze potential short- and long-term value creation in their portfolio companies.

Author : Oliver Reiche
Publisher : diplom.de
Page : 102 pages
File Size : 47,9 Mb
Release : 2014-06-01
Category : Business & Economics
ISBN : 9783954897957

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The Phenomenon of IPO Underpricing in the European and U.S. Stock Markets by Oliver Reiche Pdf

The Initial Public Offering (IPO) marks one of the most important events of a company. Basically, the aim is to generate maximum proceeds by selling the company’s shares to investors. However, the shares that are sold seem to be underpriced as the price significantly soars on the first trading day. Since the very first detection of this phenomenon in the United States in 1969, several subsequent studies have documented the existence of worldwide IPO underpricing. This study focuses on IPO Underpricing in the European and United States Stock Markets by outlining and discussing the following essential issues: What is underpricing in the context of the IPO? Which motivations are there and how do they impact? Is there IPO underpricing in the markets of Europe and the United States of America?

Author : Mario Levis,Silvio Vismara
Publisher : Edward Elgar Publishing
Page : 599 pages
File Size : 54,7 Mb
Release : 2013-11-29
Category : Business & Economics
ISBN : 9781781955376

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Handbook of Research on IPOs by Mario Levis,Silvio Vismara Pdf

The chapters offer some important new insights into issues that will be of interest not only to the academic community but also to professionals involved in the preparation, structure and execution of such transactions, market regulators, and private a

Author : Anonim
Publisher : CEPS
Page : 94 pages
File Size : 48,8 Mb
Release : 2006
Category : Electronic
ISBN : 9789290796589

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A Survey of the European IPO Market by Anonim Pdf

Author : Tim Jenkinson,Alexander Ljungqvist
Publisher : Oxford University Press, USA
Page : 264 pages
File Size : 55,5 Mb
Release : 2001
Category : Business & Economics
ISBN : 0198295995

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Going Public by Tim Jenkinson,Alexander Ljungqvist Pdf

Going Public investigates why companies routinely underprice themselves as they try to list themselves on the stock exchange. They subsequently underperform over the long-term and, in Going Public, the authors explore these 2 phenomena in plain English.

Author : Michelle Lowry,Roni Michaely,Ekaterina Volkova
Publisher : Unknown
Page : 180 pages
File Size : 43,9 Mb
Release : 2018-02-28
Category : Business & Economics
ISBN : 1680833405

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Initial Public Offerings: A Synthesis of the Literature and Directions for Future Research by Michelle Lowry,Roni Michaely,Ekaterina Volkova Pdf

The purpose of this monograph on conducting an Initial Public Offering (IPO) is to review the existing evidence and suggest areas where our understanding is less complete of the process and would benefit from further research.

Author : B. Espen Eckbo
Publisher : Elsevier
Page : 558 pages
File Size : 42,6 Mb
Release : 2007-05-21
Category : Business & Economics
ISBN : 0080488919

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Handbook of Corporate Finance by B. Espen Eckbo Pdf

Judging by the sheer number of papers reviewed in this Handbook, the empirical analysis of firms’ financing and investment decisions—empirical corporate finance—has become a dominant field in financial economics. The growing interest in everything “corporate is fueled by a healthy combination of fundamental theoretical developments and recent widespread access to large transactional data bases. A less scientific—but nevertheless important—source of inspiration is a growing awareness of the important social implications of corporate behavior and governance. This Handbook takes stock of the main empirical findings to date across an unprecedented spectrum of corporate finance issues, ranging from econometric methodology, to raising capital and capital structure choice, and to managerial incentives and corporate investment behavior. The surveys are written by leading empirical researchers that remain active in their respective areas of interest. With few exceptions, the writing style makes the chapters accessible to industry practitioners. For doctoral students and seasoned academics, the surveys offer dense roadmaps into the empirical research landscape and provide suggestions for future work. *The Handbooks in Finance series offers a broad group of outstanding volumes in various areas of finance *Each individual volume in the series should present an accurate self-contained survey of a sub-field of finance *The series is international in scope with contributions from field leaders the world over

Author : Itzhak Venezia
Publisher : World Scientific
Page : 389 pages
File Size : 53,9 Mb
Release : 2020-11-24
Category : Business & Economics
ISBN : 9789811229268

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Behavioral Finance: A Novel Approach by Itzhak Venezia Pdf

Behavioral Finance: A Novel Approach presents original papers exploring fresh ideas in behavioral finance. Its chapters span a wide range of topics in a distinct mix of traditional issues along with less conventional matters. This blend creates an optimal balance between chapters aiming at widening the scope of research in behavioral finance and those striving to refine the extant knowledge.Thus, along with traditional topics such as biases in pension decisions, analysts recommendation, gender differences in decisions and IPO's underpricing, the book also contains chapters on CEO and board members behavior, biased responses to regulation and regulatory reform, investors' attitudes towards corporate governance, cognitive biases in judicial decisions, the relations between behavioral finance and religion, new methods to calibrate the accuracy of forecasts, and the relations between behavioral finance and optimal contracting.Presenting original findings on a vast assortment of subjects, all in one venue, makes the book ideal as a reference book for researchers and practitioners interested in keeping up with the important developments in behavioral finance. The book could also serve as a handy guide for adapting insights from popular behavioral finance to some important underrepresented issues.

Author : Seth Anderson,T. Randolph Beard,Jeffery A. Born
Publisher : Springer Science & Business Media
Page : 126 pages
File Size : 55,6 Mb
Release : 2012-12-06
Category : Business & Economics
ISBN : 9781461522959

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Initial Public Offerings: Findings and Theories by Seth Anderson,T. Randolph Beard,Jeffery A. Born Pdf

Initial public offerings (IPOs) play a crucial role in allocating resources in market economies. Because of the enormous importance of IPOs, an understanding of how IPOs work is fundamental to an understanding of financial markets generally. Of particular interest is the puzzling existence of high initial returns to equity IPOs in the United States and other free-market economies. Audience: Designed for use by anyone wishing to perform further academic research in the area of IPOs and by those practitioners interested in IPOs as investment vehicles.

Author : John S. Howe
Publisher : Unknown
Page : 128 pages
File Size : 53,9 Mb
Release : 2003
Category : Electronic
ISBN : OCLC:1291252125

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Warrants in Initial Public Offerings by John S. Howe Pdf

We investigate why firms include warrants in their initial public offerings (IPOs). We use a dataset of Australian IPOs to examine two hypotheses about the inclusion of warrants in an IPO. The agency-cost hypothesis emphasizes the need for sequential financing for relatively young firms, because sequential financing reduces the opportunities for managers to squander money on unprofitable projects. The signaling hypothesis focuses on the choice of securities as a signaling mechanism in a market characterized by information asymmetry. The evidence favors the signaling hypothesis, thus contributing to our understanding of the types of securities issued by firms.

Author : Greg N. Gregoriou
Publisher : Elsevier
Page : 464 pages
File Size : 54,8 Mb
Release : 2011-04-01
Category : Business & Economics
ISBN : 9780080461670

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Initial Public Offerings (IPO) by Greg N. Gregoriou Pdf

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. *Interest in IPOs is increasing again after the Google IPO, and IPOs are up significantly from last year *Chapters by well known academics provide an international perspective, describing research results from IPO data in countries spanning the globe *Research is based on real results from IPO data collected over the past 5-7 years

Author : Mario Levis
Publisher : North-Holland
Page : 420 pages
File Size : 53,8 Mb
Release : 1996
Category : Business & Economics
ISBN : IND:30000060664954

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Empirical Issues in Raising Equity Capital by Mario Levis Pdf

Hardbound. This volume covers issues of interest to corporate financiers, investment bankers, fund managers and investors involved in the process of raising long-term capital. The papers, which represent original contributions in their specific subject areas, cover a wide range of issues. These include initial public offerings, privatisation issues, seasoned issues and international equity offerings, with empirical evidence from more than eight countries in Europe, the Far East and the Americas. The volume makes a significant contribution to bridging the gap between modern finance theory and corporate financing practice. It is a vital book for postgraduate and Phd finance courses.