Download or read book An Empirical Investigation of IPO Underpricing and the Change to the LLP Organization of Audit Firms written by Steven R. Muzatko and published by . This book was released on 2006 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Advances in Accounting written by Philip M J Reckers and published by Elsevier. This book was released on 2006-07-04 with total page 287 pages. Available in PDF, EPUB and Kindle. Book excerpt: The twenty-second volume of Advances in Accounting continues to provide an important forum for discourse among and between academic and practicing accountants on issues of significance to the future of the discipline. Emphasis continues to be placed on original commentary, critical analysis and creative research – research that promises to substantively advance our understanding of financial markets, behavioral phenomenon and regulatory policy. Technology and aggressive global competition have propelled tremendous changes over the two decades since AIA was founded. A wide array of unsolved questions continues to plague a profession under fire in the aftermath of one financial debacle after another and grabbling with the advent of international accounting standards. This volume of Advances in Accounting not surprisingly includes several articles reflective on auditor independence, auditor tenure, auditor rotation and non-audit service fees. This volume also looks at challenges facing the academic community with respect to pressures placed on faculty to publish; a data driven commentary is provided by the in-coming editor of the European Accounting Review. Other papers examine the use of financial data to estimate risk premiums, and measure the operating efficiency of firms; and re-examine market reaction to quarterly earnings. AIA continues its commitment to the global arena by publishing several papers with an international perspective. As never before the accounting profession is seeking ways to reinvent itself and recapture relevance and credibility. AIA likewise continues to champion forward thinking research. *Addresses the role of the auditor *Investigates how financial data is represented, used, and received *Scope of content is international

Download or read book Auditing written by and published by . This book was released on 2003 with total page 930 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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.

Download or read book An Empirical Investigation of Underpricing in Chinese Ipos written by Dongwei Su and published by . This book was released on 1997 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we empirically identify some of the causes of cross-sectional differences in underpricing of Chinese initial public offerings (IPOs) using data compiled for 308 firm-commitment A-share IPOs (available only to Chinese investors) and 57 B-share IPOs (available only to foreign investors). We first formulate and estimate a benchmark empirical model that relates IPO initial returns to variables widely used in studies of IPO underpricing. Then we test three hypotheses that may help explain the high A- share IPO underpricing in China. We find that IPO underpricing is the largest at the earliest stage of development of stock markets in China. The extraordinarily large IPO underpricing is at least partially due to a relatively small aggregate supply of shares. We also find that A-share IPO underpricing is better explained by a signaling model that relates IPO underpricing to subsequent seasoned equity offerings (SEOs) than by one linking government or employee ownership to equilibrium IPO underpricing. Issuers with larger IPO underpricing are more likely to raise larger amounts of capital through SEOs more quickly. The results support the notion that the primary purpose for Chinese firms going public is to raise capital, not to transfer ownership from state to private citizens. Moreover, we do not find any evidence that lottery mechanisms have contributed to the high IPO underpricing in China. Finally, we find some evidence that the difference in IPO underpricing among A and B shares can be explained by the differences in domestic and foreign investors' investment opportunities and investment sentiments.

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). [...]

Download or read book The Ernst Young Guide to the IPO Value Journey written by Ernst & Young LLP and published by Wiley. This book was released on 1999-10-22 with total page 312 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ernst & Young ist einer der führenden Finanzdienstleister in den USA. Dies ist die aktualisierte Version des Leitfadens zum Börsengang 'Ernst & Young Guide to Taking Your Company Public'. Ziel war es, leitende Angestellte anzusprechen, wobei der Schwerpunkt auf Emissionskursen (IPOs - Initial Offering Prices) liegt als Verfahren, das einen bedeutenden Einfluß auf Geschäftsoperationen haben wird. Ein praktisches Fachbuch mit wichtigen Informationen zum Börsengang, einschließlich neuer Arten von IPOs und Internetangeboten. (09/99)

Download or read book Underpricing Firm s Accounting Information and Grading of IPOs written by Poonam Rani and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The study investigates the impact of pre-Initial Public Offer (IPO) accounting information and grade of equity instruments on underpricing of IPOs. A sample of 76 book built IPOs from National Stock Exchange (NSE) has been considered for the study. Using multiple regression technique, it has been noticed that out of current ratio, debt to equity ratio, debt to total assets ratio, return on assets and return on equity ratios, two ratios, namely, return on assets and debt to total assets, have significant impact on underpricing. In addition, qualitative certification (grade of equity instruments) has no significant impact on underpricing. The study has also highlighted the importance of a sound pre-IPO financial performance because when for the first time equity instruments of a corporate entity is traded in secondary market, the same makes an investor pay more.

Download or read book The Phenomenon of IPO Underpricing in the European and U S Stock Markets written by Oliver Reiche and published by GRIN Verlag. This book was released on 2013-06-13 with total page 105 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2013 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 2.3, University of Duisburg-Essen, course: Energy & Finance, language: English, abstract: The Initial Public Offering (IPO) which marks one the most important events of a company basically aims to generate maximum proceeds by selling company’s shares to investors. Nevertheless, the shares they sell often seem to be underpriced, insofar that the price significantly soars on the first trading day. Consequently, the company generates fewer proceeds and, hence “leaves money on the table.” Since the very first detection of this phenomenon in the United States in 1969, several subsequent studies documented the existence of worldwide IPO underpricing nowadays. Considering that underpricing is costly for the company, a question arises why, therefore, despite the fact that the companies “leave money on the table”, they do not try to avoid this by setting the issuing price on the very high? One of the most striking features of this question is that it had inspired many researchers who tried to explain in various models why IPOs are generally underpriced. Besides, a lot of theoretical explanations concerning this phenomenon have been given by now; however, no common sense has been so far developed.[...]

Download or read book Underpricing of Venture and Non Venture Capital IPOs written by Bill Francis and published by . This book was released on 2000 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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.

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 An Empirical Investigation of Underpricing in Chinese IPOs written by Belton M. Fleisher and published by . This book was released on 1999 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Underpricing of Venture and Non Venture Capital Ipos written by Bill B. Francis and published by . This book was released on 2009 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we examine the premarket underpricing phenomenon within a group of venture-backed and a group of non venture-backed initial public offerings (IPOs) using a stochastic frontier approach. Consistent with previous research, we find that venture-backed IPOs are managed by more reputable underwriters and are generally associated with less underwriter compensation. However, unlike other papers in the literature, we find that the initial day returns of venture-backed IPOs are, on average, higher than the non venture-backed group. We also observe a significantly higher degree of pre-market pricing inefficiency in the initial offer price of venture-backed IPOs. Further, our results show that a significant portion of the initial day returns is due to deliberate underpricing in the premarket. We also observe that for both venture and non-venture issuers, there is a positive relationship between deliberate underpricing and the probability that underwriters provide support for the issue. This evidence is consistent with the notion that underwriters deliberately underprice the offering to reduce costs of price stabilization in the after-market.

Download or read book Underpricing of Venture and Non Centure Capital IPOs written by Bill B. Francis and published by . This book was released on 2000 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Value Creation by Private Equity backed IPOs Underpricing and Long term Performance in Germany written by Matthias Hetzenecker and published by . This book was released on 2020-11-13 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Underpricing of Venture and Non Venture Capital IPOs written by Bill Francis and published by . This book was released on 2000 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: