The Impact of Internationalization on IPO Underpricing: a Result of Agency Costs Reduction, a Certification Effect, or a Diversification Benefit?

2021 ◽  
Author(s):  
Xuan Peng ◽  
Yibo Franco Jia ◽  
Johnny Chan
Keyword(s):  
Agency Costs ◽  
Ipo Underpricing ◽  
Diversification Benefit ◽  
The Impact

scholarly journals Corporate governance and IPO underpricing: evidence from the italian market

2021 ◽  
Author(s):  
Emanuele Teti ◽  
Ilaria Montefusco
Keyword(s):  
Corporate Governance ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Stock Option ◽  
Board Members ◽  
Ipo Underpricing ◽  
Italian Market ◽  
Public Offering ◽  
The Impact ◽  
Positive Effect

AbstractThis paper aims to analyse the impact of firms’ corporate governance characteristics on the degree of first-day returns (i.e., underpricing) in the Italian initial public offering (IPO) market. In particular, this work investigates the impacts of the characteristics of boards of directors (BoDs) and ownership structure on the underpricing of newly offered shares. By studying a sample of 128 Italian IPOs between 2000 and 2016, it is concluded that corporate governance characteristics affect the degree of first-day returns following a company’s IPO. More specifically, the size of the BoD negatively affects underpricing, while the ownership of institutional investors and board members has a positive effect on the degree of underpricing. Conversely, no significant evidence is found with regard to board independence, the number of female directors in the boardroom, the implementation of stock option plans and ownership concentration.

scholarly journals The Impact of Investor Sentiment on IPO Underpricing

2021 ◽  
Author(s):  
Beiyi Chen ◽  
Jingyi Liu ◽  
Borui Zhu
Keyword(s):  
Investor Sentiment ◽  
Ipo Underpricing ◽  
The Impact

scholarly journals Agency costs and corporate governance mechanisms in Indian state-owned companies and privately owned companies - A panel data analysis

2014 ◽  
Vol 11 (4) ◽  
pp. 8-17
Author(s):  
Stuart Locke ◽  
Geeta Duppati
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Panel Data Analysis ◽  
Agency Cost ◽  
Open Market ◽  
Public Companies ◽  
Corporate Governance Mechanisms ◽  
The Government ◽  
Suitable Reference ◽  
The Impact

This paper explores the impact of corporate governance reforms and changing ownership patterns of core public sector enterprises. A number of reforms were introduced by the Government of India in 1991, and intensified in 2004 with the aim of improving efficiency and financial performance across state owned enterprises. The core state enterprises provide a unique opportunity to consider two aspects of the reforms. First, did the reforms have an impact, and second, is there a distinguishable difference between wholly government owned and partially-public shareholding enterprises? The public listed companies provide a suitable reference point for comparison. A comprehensive dataset of 123 SOEs and matching listed public companies for 10 years was collected for the study. A regression approach is adopted with agency cost as the dependant variable and several corporation-specific governance variables. Size and industry are the independent variables. The findings of the study indicate that the agency costs for mixed ownership models tend to be lower than those of the concentrated state-owned firms because they operate in an open market with the market facing the regulatory framework of a competitive environment.

The impact of media sentiments on IPO underpricing

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vikas Gupta ◽  
Shveta Singh ◽  
Surendra S. Yadav
Keyword(s):  
Initial Public Offerings ◽  
Investment Strategy ◽  
Ipo Underpricing ◽  
Content Type ◽  
Ipo Performance ◽  
Post Market ◽  
The Media ◽  
Sentiment Score ◽  
The Impact

Purpose In initial public offerings (IPOs), the media plays a pivotal role by disseminating the information to the investors who generally lack the expertise to understand the information through the prospectus. Thus, media coverage can impact the investment decision of the investors and the IPO performance. Media typically covers the IPO before listing, suggesting that it may play an important role in explaining the opening price rather than the closing price on the day of listing. Therefore, this study aims to disaggregate the traditional IPO underpricing into three categories: voluntary, pre-market and post-market and provides a comparative analysis of the media sentiments impact on the traditional and disaggregated IPO underpricing. The authors’ disaggregated IPO underpricing analysis will facilitate the investors in making an effective investment strategy based on media sentiments. Design/methodology/approach The study deploys sentiment analysis using bags of n (2) grams approach to gauge the sentiments on 2,891 media articles and uses “robust-regression” technique to analyze them on a sample of 222 Indian IPOs during 2009–2018. Findings The study reports that the sentiment score is positively related to the traditional underpricing; the sentiment score is positively associated with the pre-market underpricing and does not have any significant relationship with the post-market underpricing; the number of media articles does not play a significant role in explaining the IPO underpricing. The findings highlight the presence of a semi-strong form of efficiency in the Indian IPO market. Originality/value Existing literature focuses that the role of media on IPO performance is based on the developed countries. IPO laws differ based on the countries. For instance, in India, investors can check the demand by the other categories of investors on a real-time basis. Thus, it is interesting to study whether, with such a high level of transparency, media can explain IPO performance in the Indian market. Media generally covers IPO before listing; therefore, the present study disaggregates the IPO underpricing to evaluate the role of media on the primary and secondary market separately. It will help the investors to decide when to enter and exit the market.

Edifying role of corporate reputation in new issue market: Indian evidence

2019 ◽  
Vol 11 (2) ◽  
pp. 159-170
Author(s):  
Amanpreet Kaur ◽  
Balwinder Singh
Keyword(s):  
Initial Public Offering ◽  
Capital Market ◽  
Corporate Reputation ◽  
Critical Mass ◽  
Ipo Underpricing ◽  
Going Public ◽  
Content Type ◽  
External Agents ◽  
The Impact

PurposeThe purpose of this paper is to examine the relationship between corporate reputation and initial public offering (IPO) underpricing for a sample of 269 IPOs hitting the Indian capital market for the first time during the period ranging from April 1, 2007 to November 8, 2016.Design/methodology/approachThe study is based on secondary data (of 269 Indian companies going public) obtained from websites of capital market, Chittorgarh and Securities and Exchange Board of India (from where prospectus of each company was downloaded individually to extract data on financial variables). The study devises the technique of multivariate regression analysis to arrive at the results.FindingsThe results of the study reveal that corporate reputation serves as a signal to naive investors that assures them of issuer company’s credibility, resulting in lower underpricing. In addition to it, the study also observes the level of gender diversity on Indian boards. It is disappointing to notice low level of female representation on Indian boards and the improvement if any made in the number of female directors on Indian boards is due to provisions of new companies’ act, 2013 that mandates at least one women director on the board of every listed company. Thus, females do not constitute a critical mass on Indian boards.Research limitations/implicationsThe current study scrutinizes the impact of corporate reputation on IPO underpricing only. Furthermore, the study analyzes the underpricing of only book built IPOs. Incorporating both book built and fixed price IPOs could have provided better insights into the issue.Practical implicationsThe study outlines significant implications for managers of issuer company to portray company’s own reputation as a signal instead of showcasing borrowed reputation of external agents at the crucial juncture of going public.Originality/valueMany signals portraying quality of the offering are sent by issuer company in public arena to make IPO launch a successful event. Among many such signals like underwriting reputation, auditor reputation, director’s and CEO’s reputation, the corporate audience has started giving more impetus to issuer company’s own reputation. Thus, financial academia witnessed a paradigm shift from external agents reputation to internal agent’s reputation and now the loci of interest has shifted to company’s own reputation. Giving emphasis to corporate reputation seems more relevant in emerging economies like India where naive investors rely on their own judgments while making investment decision who take clue from various signals to infer quality of the offer. It is momentous to observe whether reputation of the company acts as a conspicuous signal to decipher IPO quality. Furthermore, there hardly exists any empirical research directly examining the impact of corporate reputation on IPO underpricing in the Indian context. Hence, the present study is a modest attempt to fill this gap in literature.

scholarly journals Agency Costs, Corporate Governance and the Nature of Controlling Shareholders: Evidence From French Listed Firms

2018 ◽  
Vol 8 (3) ◽  
pp. 256 ◽  
Author(s):  
Dabboussi Moez
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Agency Costs ◽  
Managerial Ownership ◽  
Investment Horizon ◽  
Agency Conflicts ◽  
Controlling Shareholders ◽  
Listed Firms ◽  
Indirect Benefits ◽  
The Impact

This paper examines the impact of internal corporate governance on agency costs for French firms from 2000 to 2015. Our results reveal that shareholders themselves are not a homogenous group since they have no single common investment horizon. We found that managerial ownership is more effective in mitigating operational expenses. However, they take advantage of excessive spending on indirect benefits. We show that board of directors does not serve as a significant deterrent to excessive discretionary expenses. Finally, we found that dividend policy is a useful tool to reduce agency conflicts by reducing cash that is available for discretionary uses.

The impact of external and internal corporate governance mechanisms on agency costs

2019 ◽  
Vol 19 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Jonas Schäuble
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Governance Mechanisms ◽  
Content Type ◽  
Frontier Analysis ◽  
Audit Firm ◽  
Audit Market ◽  
Corporate Governance Mechanisms ◽  
The Us ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of external and internal corporate governance mechanisms on agency costs. Design/methodology/approach The author uses data from German firms that were listed in the regulated market of the Frankfurt Stock exchange during 2006-2011. Agency costs were measured using stochastic frontier analysis, a relatively new approach to estimate agency costs. The regression analysis is applied to test the model. Findings The results indicate that an industry specialized audit firm, the presence of a large audit firm, abnormal audit fees, management ownership and variable management compensation are significantly negatively associated with the level of a firms’ agency costs. In contrast, this seems not to be true for the existence of an audit committee for which the results of the paper document a non-significant association. Originality/value The paper contributes to the existing literature in several ways. First, the research design is to the best of the authors’ knowledge the first that investigates the influence of different corporate governance mechanisms on the level of agency costs. Second, previous studies are mainly focused on the US audit market. This focus on the US audit market leaves uncertainties regarding the direction and magnitude of the empirical relationship in the European and German environmental context. Finally, the paper provides initial empirical evidence for a sample of German IFRS listed companies (IFRS – International Financial Reporting Standards).

Stage financing and syndication in the IPO underpricing of venture-backed firms: Venture capital and IPO underpricing

2019 ◽  
Vol 20 (4) ◽  
pp. 289-300 ◽  
Author(s):  
Awounou-N’dri Honorine ◽  
Dubocage Emmanuelle
Keyword(s):  
Venture Capital ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Capital Investment ◽  
Ipo Underpricing ◽  
Data Set ◽  
Public Offerings ◽  
Venture Capital Investment ◽  
Ipo Performance ◽  
The Impact

The article investigates the impact of stage financing and syndication practices on the underpricing level of venture-backed firms (VBFs) undertaking their initial public offerings (IPOs). This empirical study uses a unique hand-collected data set concerning more than 260 VBFs that went public on Euronext Paris and Alternext between 1997 and 2013. Our findings suggest a lower level of underpricing for firms backed by syndicated venture capital investment. Additionally, we find that the syndicate size is negatively associated with the level of underpricing. However, there is no evidence that stage financing has a significant impact. Syndication thus appears to be the only relevant mechanism to improve IPO performance (measured by the underpricing level), as it reduces agency costs and information asymmetry between the different stakeholders in an IPO process.

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