scholarly journals CHIEF EXECUTIVE OFFICER (CEO) POWER, CEO KELUARGA, DAN NILAI IPO PREMIUM PERUSAHAAN KELUARGA DI INDONESIA

2017 ◽  
Vol 21 (2) ◽  
pp. 219
Author(s):  
I Made Sudana ◽  
Ni Putu Nina Aristina
Keyword(s):  
Initial Public Offering ◽  
Capital Market ◽  
Family Firms ◽  
Investment Decision ◽  
Chief Executive ◽  
Ceo Power ◽  
Ceo Tenure ◽  
Public Offering ◽  
Voting Right

The development of family firms led to increase the funding requirement for expansion. Family firms can obtain funds from capital market by doing initial public offering (IPO). The aims of this research is to know the influence of CEO power using proxy of CEO voting right, CEO tenure, and CEO interlock on IPO premium, and the influence of family CEO on IPO premium. This research uses 65 samples of family firm in Indonesia during 2001-2014. The result of multiple regression showed that CEO voting right, CEO interlock, and family CEO are positive significantly affect IPO premium. This finding reveal that when investors make investment decision on IPO’s firms, they will evaluate the quality of firm’s CEO. Also, the presence of family CEO increase investor’s valuation on company shares that increase IPO premium.

An Empirical Investigation of IPO Underpricing and the Change to the LLP Organization of Audit Firms

2004 ◽  
Vol 23 (1) ◽  
pp. 53-67 ◽  
Author(s):  
Steven R. Muzatko ◽  
Karla M. Johnstone ◽  
Brian W. Mayhew ◽  
Larry E. Rittenberg
Keyword(s):  
Initial Public Offering ◽  
Audit Quality ◽  
Limited Liability ◽  
Litigation Risk ◽  
Ipo Underpricing ◽  
Audit Firm ◽  
Legal Structure ◽  
Audit Firms ◽  
Public Offering

This paper examines the relationship between the 1994 change in audit firm legal structure from general partnerships to limited liability partnerships (LLPs) on underpricing in the initial public offering (IPO) market. The change in legal structure of audit firms reduces an audit firm's wealth at risk from litigation damages and reduces the incentives for intrafirm monitoring by partners within an audit firm. Prior research suggests that underpricing protects underwriters from litigation damages, and that the level of underpricing varies inversely with both the amount of implicit insurance provided by the audit firm and the quality of the audit services provided. We hypothesize the change in audit firm legal structure reduced the assets available from audit firms in IPO-related litigation and indirectly reduced audit quality by lowering intrafirm monitoring. As a result, underwriters have incentives as a joint and several defendant with the audit firms to increase IPO underpricing, particularly for high-litigation-risk IPOs, following audit firms' shifts to LLP status. Our findings are consistent with this hypothesis.

scholarly journals Comparison of the theoretical and practical approaches to funding through the IPO way in the Czech capital market

2008 ◽  
Vol 56 (6) ◽  
pp. 59-68
Author(s):  
Tomáš Meluzín
Keyword(s):  
Initial Public Offering ◽  
Capital Market ◽  
Western Europe ◽  
The United States ◽  
Bank Loans ◽  
Professional Literature ◽  
Mortgage Crisis ◽  
The Usa ◽  
Eastern European Countries ◽  
Public Offering

Funding development of the company through the “Initial Public Offering” has a high representation globally, the Czech Republic unlike, and belongs to traditional methods of raising funds necessary for development of business in the developed capital markets. In the United States of America, Japan and in the Western Europe countries the method of company funding through IPO has been applying for several decades already. The first public stock offerings began to be applied in these markets in higher volumes from the beginning of the 60th of the last century. From that period importance of IPO goes up globally and the initial public stock offerings begin to be applied more and more even in the Central and Eastern European countries. In the conditions of the Czech capital market it is possible to identify only few companies, who attempted to funding through the IPO way at present. Greater part of the Czech companies still undergo the debit funding for financing their further development, namely in the form of bank loans. At the same time it is necessary to take into account, that the debit financing starts, thanks to so-called mortgage crisis in the USA, causing problems and mark up. Admittance of a stakeholder into the company is not convenient for all and thus IPO represents an interesting option of how to acquire a no arrear capital. The aim of this article is to determine the IPO concept, analyse its development at the world stockholder markets, describe the reasons for IPO implementation according to the contemporary professional literature and compare it with the approaches to this particular form of funding with companies that have already implemented IPO at the Czech capital 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.

Performance of Indian IPOs: An Empirical Analysis

2017 ◽  
Vol 18 (3) ◽  
pp. 734-749 ◽  
Author(s):  
Rekha Handa ◽  
Balwinder Singh
Keyword(s):  
Corporate Governance ◽  
Empirical Analysis ◽  
Initial Public Offering ◽  
Investment Decision ◽  
Ipo Underpricing ◽  
Board Committees ◽  
Effective Signal ◽  
Public Offering ◽  
Major Consideration ◽  
Ownership Patterns

The present research study contributes to the extant literature on underpricing rather uniquely by addressing the under-researched linkage of corporate governance to underpricing. The originality of this effort also lies in being one of the initial efforts of exploring governance in context of initial public offering (IPO) underpricing in Indian settings. The study comprises an empirical analysis of 404 Indian IPOs studied for their board structures and ownership attributes using IPO prospectuses. Drawing support from the signalling theory, the variables board size and board committees exhibit a significant positive relationship to the IPO returns on the listing day. In Indian markets characterized by concentrated family-owned firms, promoter ownership does work as an effective signal for investors who take cues of firm potential from ownership patterns. Corporate governance measures have a miniscule contribution in explaining the underpricing of Indian IPOs and indicating that investors do not incorporate these as a major consideration in their investment decision.

R&D investment decisions of IPO firms and long-term future performance

2018 ◽  
Vol 17 (1) ◽  
pp. 78-108 ◽  
Author(s):  
Tatiana Fedyk ◽  
Natalya Khimich
Keyword(s):  
Stock Returns ◽  
Initial Public Offering ◽  
Investment Decision ◽  
Investment Decisions ◽  
Poor Performance ◽  
Net Income ◽  
Cross Sectional ◽  
Content Type ◽  
Public Offering ◽  
D Investment

Purpose The purpose of this paper is to link valuation of different accounting items to research and development (R&D) investment decisions and investigate how suboptimal R&D choices during initial public offering (IPO) are linked to future operating and market underperformance. Design/methodology/approach For firms with substantial growth opportunities, accounting net income is a poor measure of the firm’s performance (Smith and Watts, 1992). Therefore, other metrics such as R&D intensity are used by investors to evaluate firms’ performance. This leads to a coexistence of two strategies: if earnings are the main value driver, firms tend to underinvest in R&D; and if R&D expenditures are the main value driver, firms tend to overinvest in R&D. Findings The authors show that the R&D investment decision varies systematically with cross-sectional characteristics: firms that are at the growth stage, unprofitable or belong to science-driven industries are more likely to overinvest, while firms that are able to avoid losses by decreasing R&D expenditure are more likely to underinvest. Finally, they find that R&D overinvestment leads to future underperformance as evidenced by poor operating return on assets, lower product market share, higher frequency of delisting due to poor performance and negative abnormal stock returns. Originality/value While prior literature concentrates on R&D underinvestment as a tool of reporting higher net income, the authors demonstrate the existence of an alternative strategy used by many IPO firms – R&D overinvestment.

scholarly journals Initial Public Offering (IPO) as a Potential Source of Capital for the Development of the Wood-based Industry Enterprises in Poland

2019 ◽  
Vol 1 (1) ◽  
pp. 117-123
Author(s):  
Leszek Wanat ◽  
Łukasz Sarniak ◽  
Elżbieta Mikołajczak
Keyword(s):  
Initial Public Offering ◽  
Capital Market ◽  
Stock Exchange ◽  
Descriptive Analysis ◽  
Green Economy ◽  
Development Level ◽  
Warsaw Stock Exchange ◽  
Order Preference ◽  
Public Offering ◽  
The Capital Market

Abstract The quest for new sources of financing for the development of green economy sectors and enterprises is one of the challenges to effective management. This study verifies whether a relationship exists between the activity of selected companies who access the capital market in search for new financing sources, their development level and their competitive edge. The sample used in this study was composed of companies from the forestry and wood-based sector (a major part of the Polish economy) listed on the Warsaw Stock Exchange. The Technique for Order Preference by Similarity to an Ideal Solution (TOPSIS) was used to assess the development level of selected enterprises. The main recommendations were formulated based on the findings from the analysis of performance ratios and from the comparative and descriptive analysis of data on stock exchange transactions in the wood-based sector. This is because the assumption was made that by becoming more active in the capital market and, as a consequence, by strengthening their competitive position, the enterprises covered by this study may contribute to adding value in the circular economy.

scholarly journals Family ownership, governance choices and post-ipo performance

2017 ◽  
Vol 14 (4) ◽  
pp. 216-226
Author(s):  
Bharat A. Jain ◽  
Yingying Shao
Keyword(s):  
Initial Public Offering ◽  
Family Firms ◽  
Governance Mechanism ◽  
Investment Performance ◽  
Family Control ◽  
Ipo Performance ◽  
Family Versus ◽  
Long Run ◽  
Public Offering ◽  
Governance Choices

The purpose of this study is to evaluate the extent governance choices at the time of going public differ for family versus non family firms. In addition, the short and long-run performance of family and non-family firms after their initial public offering (IPO) is examined. The results indicate significant differences between family versus non-family firms on governance choices at the time of their IPO related to dual class structures, board composition, board size, and board leadership structure. Additionally, the results suggest that investors assign a lower valuation at IPO to family firms. Further, governance mechanism that strengthen family control differentially influence post-IPO underpricing. Finally, the results suggest that family firms underperform non-family firms in terms of long-run post-IPO investment performance.

scholarly journals A Social Network Analysis on Venture Capital Alliance’s Exit from an Emerging Market

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-10
Author(s):  
Jing Wu ◽  
Chuan Luo ◽  
Ling Liu
Keyword(s):  
Venture Capital ◽  
Initial Public Offering ◽  
Capital Market ◽  
Value Chain ◽  
Emerging Market ◽  
Enterprise Development ◽  
Short Term ◽  
Enterprise Value ◽  
Public Offering ◽  
Positive Effect

This study investigated the impacts of network structure on a venture capital (VC) alliance’s successful exit from an emerging market by empirically analyzing joint VC data in China. We find that, compared to a mature capital market, the mechanism not only has a certain commonality but also shows the emerging market’s particularities. From the commonality perspective, the mechanism has a positive effect on successful exit by obtaining heterogeneity information. These particularities are manifested in the following three aspects. First, the mechanism is not conducive to deepening the enterprise value chain to establish credibility by obtaining short-term cash during an initial public offering with the enhancement of the VC alliance’s intervention ability for enterprise development. In addition, a VC alliance’s independent judgment is bound by the VC market. Furthermore, the problem of over-trust in investees reduces the likelihood of a VC alliance’s successful exit. Therefore, we should pay more attention to the particularity of emerging markets such as China to improve the relevant management mechanism.

Ownership and Operating Performance of Spanish Family IPO Firms

2020 ◽  
pp. 210-233
Author(s):  
Fuencisla Martínez Lobato ◽  
C. José García Martín ◽  
José Emilio Farinós Viñas
Keyword(s):  
Empirical Evidence ◽  
Initial Public Offering ◽  
Ownership Structure ◽  
Family Firms ◽  
Operating Performance ◽  
Operational Performance ◽  
The Family ◽  
Spanish Family ◽  
Public Offering ◽  
A Company

Previous studies have shown the existence of a relationship between the ownership structure of a company and its operational performance. In this context, the empirical evidence reveals that after an initial public offering (IPO), companies experience a decline in their operational performance. In this research, the authors investigate whether the characteristics of Spanish family firms led to a different operating behavior with respect to non-family companies when they go public through an IPO. The results show that the particularities of the family firm do not turn into significant differences in operational performance after the listing process.

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