Family Business Group Expansion Through IPOs: The Role of Internal Capital Markets in Financing Growth While Preserving Control

2020 ◽  
Vol 66 (11) ◽  
pp. 5191-5215
Author(s):  
Ronald W. Masulis ◽  
Peter K. Pham ◽  
Jason Zein
Keyword(s):  
Initial Public Offering ◽  
Family Business ◽  
Capital Markets ◽  
Market Access ◽  
Scale Up ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Internal Capital ◽  
Family Business Group ◽  
Public Offering

Using data from 44 countries, we document a new channel through which a family business group’s internal capital market supports its members. We find that groups use internal capital to incubate difficult-to-finance projects, making it feasible for them to rapidly scale up, thus facilitating their initial public offering (IPO) market access. This IPO support role is particularly valuable when groups find capital-raising through seasoned equity offerings less attractive because of control-retention concerns and in capital markets with high new-firm financing barriers. Unlike carve-outs employed as a corporate restructuring strategy, group-affiliated IPOs primarily appear to serve a group’s expansion goals rather than its liquidation needs. This paper was accepted by Gustavo Manso, finance.

Information Cascades among Investors in Equity Crowdfunding

2018 ◽  
Vol 42 (3) ◽  
pp. 467-497 ◽  
Author(s):  
Silvio Vismara
Keyword(s):  
Social Networks ◽  
Initial Public Offering ◽  
Crucial Role ◽  
Individual Investors ◽  
Information Cascades ◽  
Equity Offerings ◽  
Equity Crowdfunding ◽  
Retail Investors ◽  
Public Offering

Finance studies on information cascades, usually in an initial public offering setting, typically differentiate between institutional and retail investors, as this is the only information available to potential backers. Information available through equity crowdfunding platforms includes details on individual investors as they may disclose information about themselves by linking their profile to social networks or websites. Using a sample of 132 equity offerings on Crowdcube in 2014, we show that information cascades among individual investors play a crucial role in crowdfunding campaigns. Investors with a public profile increase the appeal of the offer among early investors, who in turn attract late investors.

Part III Beyond the Transatlantic Corridor, 10 The Paradoxes of Islamic Capital Markets

2021 ◽  
Author(s):  
Jordan Cally
Keyword(s):  
Initial Public Offering ◽  
Capital Markets ◽  
International Institutions ◽  
International Markets ◽  
Islamic Finance ◽  
International Capital ◽  
Gulf Region ◽  
International Capital Markets ◽  
Saudi Aramco ◽  
Public Offering

This chapter describes Islamic capital markets. Led by Malaysia and its distinct Islamic Market, Bursa Malaysia-I, Islamic finance has entered the mainstream of international capital markets, primarily in the form of ‘Islamic bonds’ (sukuk) and fund products. Saudi Arabia, with its well-publicized Saudi Aramco initial public offering (IPO) in 2019, raised, less successfully, a different flag in the international markets. Islamic finance has infiltrated conventional markets too. Non-Islamic issuers, sovereigns, corporates and international institutions, have issued sukuk, attracted by the wash of liquidity and investors in the Gulf region. Indeed, Islamic finance has been rubbing shoulders with modern conventional finance for several decades now. As ‘conventional’ finance has become less ‘conventional’, shari'a compliant finance has become more accepted. Impediments to growth persist; the imperviousness to standardization and the artificiality of the structures underlying the financial products increase costs and possibly risk, making the products uncompetitive. However, cost is not the only consideration in the marketplace. With greater interest in ethical and ESG (environmental, social, and governance) investing, Islamic finance may be the path or the way to future markets.

Price Determination in Public Offering and Evaluation Methods

2015 ◽  
pp. 144-165
Author(s):  
Ümit Hacıoğlu ◽  
Hasan Dinçer ◽  
Zuhal Akça
Keyword(s):  
Performance Evaluation ◽  
Initial Public Offering ◽  
Capital Markets ◽  
Evaluation Methods ◽  
Price Determination ◽  
Key Factors ◽  
Advanced Economies ◽  
Ipo Pricing ◽  
And Performance ◽  
Public Offering

The latest financial situation in capital markets in advanced economies, emerging markets, and the Euro zone illustrates that volatility and risks related to global economic activity and global financial markets have impact on local capital markets and directly affects the value of company stocks even though an investor diversified his/her risk by investing in a portfolio. The initial public offering process, performance evaluation methods, and price determination became key factors for companies and investors. In this chapter, advantages and disadvantages of IPO, pricing methods and performance evaluation methods are assessed.

Price Determination in Public Offering and Evaluation Methods

2017 ◽  
pp. 1293-1315
Author(s):  
Ümit Hacıoğlu ◽  
Hasan Dinçer ◽  
Zuhal Akça
Keyword(s):  
Performance Evaluation ◽  
Initial Public Offering ◽  
Capital Markets ◽  
Evaluation Methods ◽  
Price Determination ◽  
Key Factors ◽  
Advanced Economies ◽  
Ipo Pricing ◽  
And Performance ◽  
Public Offering

The latest financial situation in capital markets in advanced economies, emerging markets, and the Euro zone illustrates that volatility and risks related to global economic activity and global financial markets have impact on local capital markets and directly affects the value of company stocks even though an investor diversified his/her risk by investing in a portfolio. The initial public offering process, performance evaluation methods, and price determination became key factors for companies and investors. In this chapter, advantages and disadvantages of IPO, pricing methods and performance evaluation methods are assessed.

The Pricing of IPO Audit Specialization and Subsequent Issuer Underpricing

2021 ◽  
Author(s):  
Jung Eun Park ◽  
Norman Massel
Keyword(s):  
Empirical Evidence ◽  
Initial Public Offering ◽  
Capital Markets ◽  
Discretionary Accruals ◽  
Costs And Benefits ◽  
Lower Likelihood ◽  
Financial Misstatement ◽  
Public Offering ◽  
Auditor Specialization

We study the costs and benefits to the issuer of engaging an initial public offering (IPO) auditor specialist. We measure IPO auditor specialization and then find that IPO specialist auditors earn significant fee premiums relative to IPO auditors without specialization and that clients with an IPO specialist auditor exhibit lower levels of underpricing relative to clients without an IPO specialist auditor. We also demonstrate that IPO specialist auditors provide higher quality audits than IPO auditors without IPO audit specialization, finding that their IPO clients have a lower likelihood of financial misstatement and have lower discretionary accruals. Collectively, our results have important implications for the auditing profession and capital markets because we demonstrate empirical evidence of the costs and benefits of engaging IPO specialist auditors.

scholarly journals Earnings Management by Financing Purposes

2016 ◽  
Vol 32 (6) ◽  
pp. 1871
Author(s):  
Soonwook Hong
Keyword(s):  
Earnings Management ◽  
Capital Markets ◽  
Discretionary Accruals ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Working Capital ◽  
Capital Financing ◽  
Investment Capital ◽  
The Difference

An objective of this study is to investigate the difference of earnings management before financing by capital financing purposes. Two main methods of financing directly in capital markets are seasoned equity offerings (hereafter ‘SEO’) and issuing bonds (hereafter ‘BOND’). The purposes of financing are largely classified into working capital and investment capital. This study investigates whether the firms that need to finance for working capital are more motivated for earnings management than the firms that need to finance for investment capital. The results show that discretionary accruals before financing for working capital are greater than financing for investment capital for both SEO and BOND. 

IPO Regulators Gone Wild

2018 ◽  
pp. 51-80
Author(s):  
Kevin K. Boeh ◽  
Craig Dunbar
Keyword(s):  
Initial Public Offering ◽  
Capital Markets ◽  
Investor Protection ◽  
Equity Capital ◽  
Efficient Markets ◽  
The Past ◽  
Public Offering ◽  
And Control ◽  
Alternative Activities

A complex set of regulations is intended to guide and control the capital markets and the equity initial public offering (IPO) process, with the goal of creating efficient markets for equity capital and investor protection. Often in response to market innovations, regulators impose new, and reinterpret existing, regulations. This chapter documents key US securities regulations over the past two decades that have affected the IPO process. While motivated by good intentions, many of these regulations have led to burdens on issuing firms and have had deleterious effects on US capital markets. The authors posit that these effects are driven by the burdens placed on firms, the incentives of firms to pursue alternatives to an IPO, the disincentives for banks to conduct IPOs, and the attractiveness of more profitable (and less regulated) alternative activities available to banks. This suggests questions for IPO researchers concerning the effects of such regulations.

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