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1 – 10 of over 2000
Book part
Publication date: 10 November 2016

R. Greg Bell, Abdul A. Rasheed and Sri Beldona

To date there is little understanding of the factors that impact the survival of foreign IPOs after they list on US stock exchanges. In this study, we examine how foreign IPO

Abstract

To date there is little understanding of the factors that impact the survival of foreign IPOs after they list on US stock exchanges. In this study, we examine how foreign IPO survival is contingent on institutional factors associated with the firm’s home country. We also explore how corporate governance and organizational identity influence the survival of foreign IPOs in the United States. Results suggest that the US institutional environment supports foreign firms with more independent and professional leadership, and that knowledge-intense organizations have higher chances of long-term success after listing on US exchanges.

Details

Global Entrepreneurship: Past, Present & Future
Type: Book
ISBN: 978-1-78635-483-9

Keywords

Article
Publication date: 25 September 2019

Muhammad Amin, Jianfeng Wu and Md Ziaul Haque

Integrating social network theory with signaling theory, the purpose of this research is to examine the impact of corporate political connections and executive’s international…

Abstract

Purpose

Integrating social network theory with signaling theory, the purpose of this research is to examine the impact of corporate political connections and executive’s international experience on Chinese firms initial public offerings (IPOs) performance in the USA.

Design/methodology/approach

This study used Securities Data Company (SDC) New Issues database to identify all Chinese firms that went public in the USA between 2003 and 2014. Consistent with previous research, IPO firms excluded from the sample include merger or acquisitions, spin-offs and initial stage listed firms. The final sample size is of 142 Chinese foreign IPOs in the US markets.

Findings

This study finds that firms with political connections perform significantly poor than firms without political connections. It shows that US stock markets react to the signals of political connections of Chinese foreign IPOs. In response, the Chinese foreign IPOs can signal international work experience of top executives to US investors. The results show that the executives’ international work experience has significant positive relationships on foreign IPO performance of Chinese firms. Moreover, this study finds that the interaction between corporate political connections and international experience pursues positive effects on the performance of foreign IPOs.

Originality/value

This research intends to extend the knowledge of how corporate political connections and international work experience affects the performance of Chinese firms attempting to access US capital markets. To date, scholars have not investigated the influence of corporate political connections on the amount of capital raised by foreign IPOs.

Details

Journal of Entrepreneurship in Emerging Economies, vol. 12 no. 3
Type: Research Article
ISSN: 2053-4604

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Article
Publication date: 13 May 2019

Muhammad Amin, Jianfeng Wu and Rungting Tu

The purpose of this paper is to integrate the upper echelon theory with signaling theory and examine the impact of top management team (TMT) on the initial public offering (IPO

Abstract

Purpose

The purpose of this paper is to integrate the upper echelon theory with signaling theory and examine the impact of top management team (TMT) on the initial public offering (IPO) performance of Chinese firms in the USA.

Design/methodology/approach

This study used Security Data Corporation (SDC) that is a central database for foreign IPOs in the USA. The authors identified 142 Chinese firms that issued stocks on the US markets between 2003 and 2014. This study used firm’s final prospectuses to collect data manually.

Findings

This study finds that the TMT characteristics such as functional heterogeneity and international exposure convey the positive signal of firm’s legitimacy to the US investors and increase the IPO performance.

Originality/value

This study extends the upper echelon perspective that has previously overlooked the signaling value of TMT characteristics in the foreign IPO studies. The top management plays an important role to the firm’s successful foreign market listing. Since China joined the WTO in 2001, a large number of Chinese firms have started IPOs in the USA, but there is a dearth of research on these firms. This study aims to contribute to the study of international business and management and describes that the TMT functional heterogeneity and international exposure have a significant role in the success of Chinese foreign IPOs.

Details

Chinese Management Studies, vol. 13 no. 3
Type: Research Article
ISSN: 1750-614X

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Article
Publication date: 1 November 2022

Lokman Tutuncu

The last two years are characterized by record numbers of initial public offerings (IPOs), foreign investor abstinence and rising retail investor appetite in the Turkish stock…

Abstract

Purpose

The last two years are characterized by record numbers of initial public offerings (IPOs), foreign investor abstinence and rising retail investor appetite in the Turkish stock market. This study aims to investigate whether retail investor dominance coupled with foreign investor aversion has significant impact on initial and short-term returns.

Design/methodology/approach

The research covers the population of 188 companies going public at Borsa Istanbul from 2010 to the end of 2021. Three hypotheses are developed and tested by means of ordinary least squares and Tobit regressions to examine the association between investor allocations and returns. A new measure for retail investor trade size, average retail investment per capita (ARI) is utilized to explain the linkage between retail investor appetite and short-term returns. Two-stage least squares and Heckman selection regressions are employed for robustness tests to address potential endogeneity.

Findings

Pandemic IPOs provide significantly larger short-term returns than pre-pandemic IPOs measured up to one month. Underpricing during the pandemic is not significantly greater due to 10% daily price limit, which leads to a gradual release of retail investor appetite and increase in stock prices in the short term. Retail investors control 66% of the market during the pandemic compared to 35% before, while foreign institutional investor market share declines from 53% to 6%. Average retail investor number in an offering increases by 55.4-fold during the pandemic, resulting in substantially smaller allocations to the average individual investor. Greater returns during the pandemic are associated with smaller retail investment per capita, while domestic institutional investment is associated with lower returns as typically expected from institutional investors, although its significance disappears after controlling for potential endogeneity.

Research limitations/implications

This study investigates returns up to one month. To better understand whether short-termism of retail investors and recent foreign investor aversion have detrimental effect on companies, and on the market as a whole, longer-term studies are needed. This is not possible at the current stage since not enough time has passed.

Practical implications

This research is relevant to emerging market investors and companies due to the ongoing foreign investor aversion and fast-changing market conditions. The research cautions market participants against the short-termism of retail investors and urges policymakers to regain investors with longer investment horizons.

Social implications

Many newcomer retail investors are in the stock market due to lack of more profitable alternatives in Turkey. Although their participation is accompanied by larger short-term returns for the time being, the current momentum is unlikely to last long as the pandemic ends, and interest rates around the world begin to be raised. The study urges small investors to invest in a more informed manner and aim for longer time horizons, as it may not be possible to make a quick profit in the stock markets in the near future.

Originality/value

This is the first study to investigate changing investor profile in emerging markets and its impact on returns following pandemic declaration. The question is important because the investor composition affects the investment horizon in the market.

Details

China Finance Review International, vol. 13 no. 3
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 12 February 2018

Robert Killins and Peter V. Egly

The purpose of this paper is to investigate the long-run performance of a unique set of US domiciled firms that have bypassed the US capital markets in pursuit of their initial…

Abstract

Purpose

The purpose of this paper is to investigate the long-run performance of a unique set of US domiciled firms that have bypassed the US capital markets in pursuit of their initial public offering (IPO) overseas. Additionally, this paper then tests the popular underwriter prestige impact and the window of opportunity hypothesis on this unique subset of IPOs.

Design/methodology/approach

Using a sample of foreign and purely domestic IPOs made by US firms from 2000 to 2011, this study investigates the long-term performance, one-, two- and three-year by using two measures (buy-and-hold return and cumulative abnormal returns) to test the long-run returns of newly listed companies. Finally, the research incorporates both the traditional matching methodology (issue year and size) along with propensity score matching methodology.

Findings

FIPOs of US companies underperform DIPOs and their matched DIPOs; furthermore, FIPOs underperform the index of the two listing countries they use the most (UK and Canada). Although the choice of a reputable underwriter mitigates underperformance, the choice of listing in a foreign country only may be a result of possible high valuations accorded by foreign investors who buy US-listed companies on the domestic exchange possibly for reducing exchange rate risk and gaining US diversification without incurring additional costs. It is, thus, possible that US companies that undertake Foreign IPOs not only escape potentially higher Security and Exchange Commission regulations and disclosure but also benefit from higher valuations in the foreign markets.

Originality/value

To the best of the authors’ knowledge, this is the first study to investigate the long-term performance of US firms bypassing the US capital markets in pursuit of their initial equity offering elsewhere. Caglio et al. (2016) investigated why firms decide to pursue such equity raising activity but fail to investigate the firms’ actual performance after issuing equity. This research fills such a gap in the literature and is important for both academics and practitioners. Practitioners can use this information in assessing the quality of such investments in the long-run, and firms can use such information when determining the different options of issuing equity. Further, regulators should be aware of the implications that increased regulations have on capital raising activities in their domestic market.

Details

Review of Accounting and Finance, vol. 17 no. 1
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 1 March 2013

Daniel J. McCarthy, Sheila M. Puffer and Snejina Michailova

The purpose of this article is to analyze the initial public offerings (IPOs) of Russian companies in the context of the country's investment attractiveness and the readiness of…

Abstract

Purpose

The purpose of this article is to analyze the initial public offerings (IPOs) of Russian companies in the context of the country's investment attractiveness and the readiness of its companies to list on stock exchanges, domestically and/or internationally. The analysis takes a balanced approach. It recognizes the positive aspects from the development of Russia's stock markets and the launched and planned IPOs of Russian companies, but underscores reasons for caution in assessing this developing situation, emphasizing the need to maintain a critical perspective. The article is intended to help determine, in the sphere of IPOs at least, whether Russia is currently, or is on the road to becoming, as solid as a BRIC.

Design/methodology/approach

Drawing upon publicly available material from English‐ and Russian‐language sources, the authors discuss the development of the two Russian stock exchanges and analyze the progress that Russian companies have made in successfully completing IPOs on Russian and foreign stock exchanges. The paper also analyzes the barriers faced by Russian companies in launching IPOs and/or attracting investment, including global factors, country‐level conditions, and individual firm characteristics.

Findings

The results of the analysis indicate that the Russian stock exchanges have developed reasonably well over the two decades since perestroika. Correspondingly, a substantial number of Russian companies have mounted successful IPOs not only on the Russian stock exchanges but also on international exchanges, particularly the London Stock Exchange. Yet the number of successful IPOs relative to the number of planned IPOs has been much smaller than the global average. The latter finding is attributed to Russia's particular investment problems, which extend beyond global economic forces, specifically the country‐level and firm‐specific factors, both of which heighten the risk for investors.

Originality/value

The authors' review of the literature has uncovered no journal articles covering the circumstances surrounding the IPOs of Russian firms. Additionally, the available sources seldom provide a balanced view, much less a critical view of the IPO landscape in the context of Russia's overall circumstances, particularly risk. Thus, this article, with its critical but balanced perspective, allows for a relatively objective analysis for theorists as well as investors as they approach the topic of Russian company IPOs, domestically or internationally.

Details

Critical perspectives on international business, vol. 9 no. 1/2
Type: Research Article
ISSN: 1742-2043

Keywords

Article
Publication date: 7 January 2021

Nan Cui, Peng Xie, Yiran Jiang and Lan Xu

The purpose of the current study is to examine how and when home country identity salience of emerging market companies affects their overseas initial public offering (IPO

Abstract

Purpose

The purpose of the current study is to examine how and when home country identity salience of emerging market companies affects their overseas initial public offering (IPO) performance

Design/methodology/approach

By using secondary data from multiple sources, this study empirically tests the proposed research framework in the context of Chinese companies' overseas IPO activities in the US stock markets.

Findings

The results demonstrate that home country identity salience positively affects overseas IPO performance, and thus can be recognized as the asset of foreignness. Cultural specification positively moderates the effect of home country identity salience on overseas IPO performance. Market internationalization also plays an important moderating role in the relationship between home country identity salience and overseas IPO performance.

Originality/value

The current study identifies a new factor, that is, home country identity salience, that can mitigate the liability of foreignness for emerging market companies in their overseas IPO activities. The study also documents the positive cultural impacts on overseas investors in a financial and international context.

Details

International Marketing Review, vol. 38 no. 4
Type: Research Article
ISSN: 0265-1335

Keywords

Article
Publication date: 10 November 2020

Haifeng Yan, Qihu Wang, Yi Ke and Juan Wang

It is widely accepted that business excellence comes from firm-specific factors. However, it is still unclear how institutional relatedness – the degree of embeddedness with the…

Abstract

Purpose

It is widely accepted that business excellence comes from firm-specific factors. However, it is still unclear how institutional relatedness – the degree of embeddedness with the dominant institutions that confer resources and legitimacy, influences the business excellence of the firm. The purpose of this study is to explore the influence of three kinds of institutional relatedness, i.e. home government ties, initial public offerings (IPOs) and alliances with foreign firms, on the business excellence of Chinese firms.

Design/methodology/approach

This study uses a sample of firms enlisted on the “Most Respected Companies” rank in China during the period 2002–2015 and their paired firms who are absent from the list, by means of ordinary least square regression estimator, to explore the relationship between institutional relatedness and business excellence.

Findings

The empirical results suggest that IPOs and alliances with foreign firms significantly strengthen firms’ business excellence. Furthermore, home government ties have positive effects on outbound IPOs and alliances with foreign firms but hinder business excellence.

Originality/value

This study extends the business excellence literature by characterizing institutional rather than firm-specific factors from an institution-based view. It also enriches research on outcomes of institutional relatedness through investigating empirically its impact on business excellence. The findings provide new insights into the dual role of home government ties in achieving business excellence.

Details

Chinese Management Studies, vol. 15 no. 2
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 5 April 2013

Lukasz Prorokowski

The purpose of this paper is to focus on Initial Public Offering (IPO) investments, performance and activity in times of the global financial crisis.

Abstract

Purpose

The purpose of this paper is to focus on Initial Public Offering (IPO) investments, performance and activity in times of the global financial crisis.

Design/methodology/approach

The paper utilizes, in a pioneering attempt, a modified regression model that is widely used in medical research (i.e. measuring the effectiveness of painkillers, aspects of breastfeeding, cancer research) but proved efficient and informative for the studied area. Embarking on Cox's Hazard Model perfectly mirrored investors' approach to IPO investments. Henceforth, the empirical findings reported in the paper became practical for IPO investors. The quantitative findings are then discussed with high‐profile practitioners, in order to inject more realism into the study. The qualitative research framework expands the empirical analysis to cover significant issues related to IPO activities and proves invaluable in the process of constructing practical implications.

Findings

Since the main purpose of the paper is to test the profitability of targeting IPOs from the Polish stock market, the main research question attempted in the paper refers to finding out whether IPO investments constitute an attractive alternative for direct equity investments, especially during the global financial turmoil. On this occasion, the current paper advises on trading strategies that involve targeting IPOs and shield investors from experiencing crisis‐induced losses. These findings remain topical as they contribute to the current debate on tailoring investment approaches to the global financial crises. Furthermore, focusing on the issues related to the overblown deficit reported by the transition economy delivers novel and important implications for policymakers striving to stabilize budget in the aftermath of the nascent financial crisis.

Originality/value

What distinguishes the paper from previous studies is the original methodology, three‐dimensional approach to IPO activities (adopting a company's, investor's and policymaker's perspectives) and focusing on the systemically important European market that somehow was overlooked by previous studies in this area but recently vaulted into prominence among international investors who regard the Polish stock market as a regional leading bourse.

Article
Publication date: 11 July 2016

Kulabutr Komenkul and Dhanawat Siriwattanakul

The purpose of this paper is to investigate the characteristics of the Initial Public Offering (IPO) market, IPO underpricing and the long-run performance of IPOs and to find out…

Abstract

Purpose

The purpose of this paper is to investigate the characteristics of the Initial Public Offering (IPO) market, IPO underpricing and the long-run performance of IPOs and to find out the ex ante difference in the market structure between the pre-, during and post-periods of the Unremunerated Reserve Requirement (URR) at the 30 per cent rate.

Design/methodology/approach

The sample is a total of 245 IPOs listed on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (mai), during the period 2001-2012. The explanatory variables consist of the age of the firm, the offer size, the time-lag between the IPO date and the first trading date, the proportion of shares owned by the government and the IPO subscription rates by foreign and institutional investors. In further analysis, the authors adopt a two-stage least squares approach to derive unbiased estimates of the relationship between government ownership, IPO underpricing and firm quality.

Findings

We find the ex ante uncertainty and earning management partially explain the IPO underpricing phenomenon in the Thai IPO market. Our findings support the impresario hypothesis shown by the negative relation between underpricing and the three-year after-market. In addition, the 30 per cent URR imposition by the Thai Central Bank promptly reduced the number of IPO issues and the proportion of foreigners and institutions subscribing to IPOs. However, it was able to enhance the degrees of IPO underpricing and the long-run performance of IPOs in Thailand.

Practical implications

The results presented in this paper may be, therefore, useful for investors, security analysts, companies and regulators in many other emerging markets beyond Thailand. Given the results from the over-performance of IPOs in the post-URR period, investors may do better holding Thai IPOs for a long period with a likelihood of gaining a higher return.

Originality/value

This paper contributes to the literature concerning IPOs – in that we have considered two stock markets, namely, SET and mai. Furthermore, unique data such as the government ownership and proportion of IPOs subscribed by foreign and institutional investors are taken into consideration in our research model. To the best of our knowledge, for the first time in the Thai IPO market, the effect of the 30 per cent URR on IPO underpricing and the performance of IPOs in the long-run has been closely examined.

Details

Journal of Financial Regulation and Compliance, vol. 24 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

1 – 10 of over 2000