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Market Segmentation And Ipo Underpricing
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Book Synopsis Market Segmentation and Ipo-Underpricing by : Adrian Hunger
Download or read book Market Segmentation and Ipo-Underpricing written by Adrian Hunger and published by . This book was released on 2004 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Underpricing of initial public offerings (IPOs) is a well-known phenomenon in financial capital markets worldwide. Even if several explanations and theories deal with the difference of the issue price of new shares and their first trading price in the secondary market, the underpricing-puzzle is still unsolved. Based on the implications of Rock (1986) and Beatty/Ritter (1986) this study focuses on the influence of vertical market segmentation. The analysis of 435 German IPOs from 1997-2002 shows that the empirical findings are not clear in harmony with what would be expected because IPO-underpricing is the highest in the Neuer Markt even if the Neuer Markt is the second larges market segment in Germany for IPOs and demands the highest listing requirements.
Book Synopsis The Specific Underpricing of IPOs in U.S. Stock Markets by : Claus Birkenbeul
Download or read book The Specific Underpricing of IPOs in U.S. Stock Markets written by Claus Birkenbeul and published by GRIN Verlag. This book was released on 2010-09-30 with total page 87 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2010 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, Munich Business School University of Applied Sciences, language: English, abstract: The economical development is improving and world trade volumes are expected to recover. The recorvery process is developing constantly but slowly: Share prices have rebounded within 2009, worldwide trade volumes have recovered slightly and are expected to catch up with values from the end of 2008 during the next year (cf. OECD 2009). The world is recovering from one of the most severe economic downturns since The Great Depression. Comparing GDP volumes from the previous period at the same time, OECD countries lost up to 2%. As a logical consequence the U.S. IPO market has been affected by the economic meltdown as well. "IPO activity tends to cluster in certain time periods, thus it appears in waves, so-called hot IPO markets" (Hamer 2007, 9). From 2007 to 2008 th e number of IPOs decreased. The U.S. market broke down by more than 85% in one year. In 2007 there were 160 IPOs whereas in 2008 21 securities went public fort the first time (cf. Ritter 2010, 2). After the slowest year for IPOs since the 1970s, the market began to show signs of life again in 2009. The number of offerings increased by 21% although the offering value decreased by almost 15% (cf. PWC 2010). [...]
Book Synopsis The Specific Underpricing of Ipos in U S Stock Markets by : Claus Birkenbeul
Download or read book The Specific Underpricing of Ipos in U S Stock Markets written by Claus Birkenbeul and published by GRIN Verlag. This book was released on 2010-10 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2010 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, Munich Business School University of Applied Sciences, language: English, abstract: The economical development is improving and world trade volumes are expected to recover. The recorvery process is developing constantly but slowly: Share prices have rebounded within 2009, worldwide trade volumes have recovered slightly and are expected to catch up with values from the end of 2008 during the next year (cf. OECD 2009). The world is recovering from one of the most severe economic downturns since The Great Depression. Comparing GDP volumes from the previous period at the same time, OECD countries lost up to 2%. As a logical consequence the U.S. IPO market has been affected by the economic meltdown as well. "IPO activity tends to cluster in certain time periods, thus it appears in waves, so-called hot IPO markets" (Hamer 2007, 9). From 2007 to 2008 th e number of IPOs decreased. The U.S. market broke down by more than 85% in one year. In 2007 there were 160 IPOs whereas in 2008 21 securities went public fort the first time (cf. Ritter 2010, 2). After the slowest year for IPOs since the 1970s, the market began to show signs of life again in 2009. The number of offerings increased by 21% although the offering value decreased by almost 15% (cf. PWC 2010). [...]
Book Synopsis IPO Underpricing in Germany - Empirical Analysis of Influencing Variables by : Justyna Dietrich
Download or read book IPO Underpricing in Germany - Empirical Analysis of Influencing Variables written by Justyna Dietrich and published by diplom.de. This book was released on 2011-10-27 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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 [...]
Book Synopsis The Phenomenon of IPO Underpricing in the European and U.S. Stock Markets by : Oliver Reiche
Download or read book The Phenomenon of IPO Underpricing in the European and U.S. Stock Markets written by Oliver Reiche and published by Anchor Academic Publishing (aap_verlag). This book was released on 2014-06-23 with total page 105 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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?
Book Synopsis IPO Underpricing, Size Effects, the Greenshoe and Positive Conditioning by :
Download or read book IPO Underpricing, Size Effects, the Greenshoe and Positive Conditioning written by and published by . This book was released on 2000 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis A Survey of the European IPO Market by :
Download or read book A Survey of the European IPO Market written by and published by CEPS. This book was released on 2006 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Empirical Evidence on IPO-Underpricing by : Marius Hamer
Download or read book Empirical Evidence on IPO-Underpricing written by Marius Hamer and published by GRIN Verlag. This book was released on 2008 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis A Fully-rational Liquidity-based Theory of IPO Underpricing and Underperformance by : Matthew Pritsker
Download or read book A Fully-rational Liquidity-based Theory of IPO Underpricing and Underperformance written by Matthew Pritsker and published by . This book was released on 2006 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Variables Influencing the Severity of IPO Underpricing: An Empirical Analysis of the German Market by : Justyna Dietrich
Download or read book Variables Influencing the Severity of IPO Underpricing: An Empirical Analysis of the German Market written by Justyna Dietrich and published by Diplomica Verlag. This book was released on 2012-03 with total page 81 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Investment Without Risk written by Ti Liu and published by . This book was released on 2004 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: China enjoys the highest level of initial returns of initial public offerings (IPOs) in the world, with an average market-adjusted initial return of 132.49%, using data on 354 new issues in China from 1 January 1999 to 31 December 2002. This paper advances an explanation of this phenomenon. It proposes some possible reasons for the high returns and finds that most of the hypotheses based on information asymmetry, such as the winner's curse, signaling, market feedback and the bandwagon hypothesis, fail to fully explain the phenomenon of underpricing. The paper finds only weak evidence for the winner's curse hypothesis. Only the IPO size has a statistically significant positive relationship with the level of the market-adjusted initial returns. The paper argues that the underpricing of IPOs is the result of the interactive process between the offer price and the trading price on the secondary market, while the information asymmetry hypotheses only focus on the determination of the offer price. A new explanation focusing on the interplay of supply and demand in both primary and secondary markets is advanced and tested using the sample data. The results show that IPO underpricing in China is the result of overpriced secondary market shares under the condition of de facto segmented markets. IPO underpricing is positively related to the trading price in the secondary market, i.e., the higher the P/E ratio of the market (used as a proxy for trading price level in the secondary market), the more underpricing that occurred in the IPO. China's primary and secondary markets are in practice segmented, i.e., in general money from one does not flow to the other. Under these conditions, the returns in the two markets show little tendency to converge. This theory suggests that secondary market reform is essential to mature the primary market. Among all the reform measures, making non-tradable shares tradable and introducing shortselling or a day-trading mechanism are most important to lowering secondary market prices to more reasonable levels.
Book Synopsis Initial Public Offerings: Findings and Theories by : Seth Anderson
Download or read book Initial Public Offerings: Findings and Theories written by Seth Anderson and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 126 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Asymmetric Information relating to Initial Public Offering Underpricing by : Fotini Mastroianni
Download or read book Asymmetric Information relating to Initial Public Offering Underpricing written by Fotini Mastroianni and published by GRIN Verlag. This book was released on 2017-05-03 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2012 in the subject Economics - Finance, , language: English, abstract: The main reason why companies decide to proceed with IPO is mainly to gain access to new funding. The proceeds from the share issue itself are not necessarily intended for direct expansion. The prospects for growth from acquisitions, the funds available for organizational expansion and refinancing of current borrowings have shown, among other things, to be the main motives that newly listed companies consider as very important. The general initial public offering procedure enhances the image and publicity of enterprises and gets not only an initial certification of the professionals in the financial markets but also a long-term price bidding (price signal) to suppliers, workforce and customers. According to Roell (1996), a robust equity value in the subsequent acquisition (during the trading of securities after their initial bid for public offering) reassures suppliers that they can safely grant trade credit, employees are convinced that they can expect a fairly stable job, and customers think that the products of the company will be supported as a result of their purchase (in the aftermath of their purchase).
Book Synopsis Why Privatizations are Grossly Underpriced by : Alvan E. Ikoku
Download or read book Why Privatizations are Grossly Underpriced written by Alvan E. Ikoku and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical analyses of the pricing of new issues of common stock in equity markets all over the world reveal significantly larger underpricing of privatizations than ordinary initial public offerings. A model of new issue pricing which is consistent with this empirical regularity is developed in which managers (including bureaucrats) underprice shares in order to create additional consumer surplus. Managers then try to capture this contrived surplus in pecuniary and non-pecuniary terms, including political support. The non-pecuniary benefit of underpricing is termed influence, and the role of influence-seeking in the greater underpricing of privatizations is examined. This model contributes to the resolution of the IPO underpricing anomaly by introducing a motive ignored by theories based on asymmetric information, signaling, the insurance motive, and market segmentation.
Book Synopsis The Marketing Role of Ipos by : Elizabeth Demers
Download or read book The Marketing Role of Ipos written by Elizabeth Demers and published by . This book was released on 2014 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the potential marketing benefits of going public and of IPO underpricing. We identify an empirical setting which allows us to examine the impact of IPO underpricing on a direct and timely measure of the issuing firms' product market demand: visitors to B2C Internet companies' websites. If underpricing attracts media attention and creates valuable publicity, we expect an increase in web traffic following the IPO. Consistent with this hypothesis, we find that web traffic growth in the month after the IPO is positively and significantly associated with initial returns. Our analyses suggest that the marketing benefits of IPO underpricing for the B2C Internet firms in our sample are economically significant and that IPO underpricing may be less costly to B2C Internet firms than is indicated by the raw amount of money left on the table. We also investigate media reaction to initial returns for a broader sample of IPOs. Our evidence suggests that the marketing benefits of underpricing extend beyond the Internet sector and the quot;hot issuesquot; market of late 1990's.
Book Synopsis The Listing Market Choice and the IPO Underpricing by : Takeshi Yamamoto
Download or read book The Listing Market Choice and the IPO Underpricing written by Takeshi Yamamoto and published by . This book was released on 2009 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, I have reviewed companies that conducted IPOs between 1990 and 2004, measuring the underpricing, which represents the ratio of the initial offering price to the price immediately after the listing, and considered the explanatory factors from a statistical point of view. There are quite a few empirical studies about IPO underpricing including those which studied Japanese companies, but in conducting this study, I broke the Japanese companies that conducted IPOs in Japan into those which were more interested in the maximization of the offering price and those which are more interested in the success of future offers at market price, hypothesizing nevertheless that both types of companies have made their choice for the purpose of minimizing the opportunity loss for the existing shareholders that arises from the underpricing, and the amount of loss that arises from dilution. In Japan, apart from the IPOs by entrepreneurs, there are many cases of public offerings by subsidiaries or affiliated companies of industrial companies that are listed companies themselves.I hypothesized that many of the former companies seek lower costs and higher post-offering liquidity, while many of the latter companies seek markets that represent smaller underpricing even at a higher cost. In Japan, two groups of markets where IPOs are possible have long coexisted; the second section and regional markets, and JASDAQ and markets for emerging companies, competing with each other without one overpowering the other. As a factor to explain this fact, I will point to the unique characteristics that each group offers that suit the different purposes of the companies conducting an IPO.In this study, taking into consideration the endogenous relationship between the IPO underpricing and the number of offered/sold shares, I have estimated the model that explains the choice of listing market by the IPO company in the first step, and, taking the result into consideration, I have introduced a simultaneous equation model to perform OLS estimation to explain underpricing in the second step.
Download or read book Going Public written by Tim Jenkinson and published by Oxford University Press, USA. This book was released on 2001 with total page 264 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
