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1 – 10 of 38Manali Chatterjee, Titas Bhattacharjee and Bijitaswa Chakraborty
This paper aims to review, discuss and synthesize the literature focusing on the Indian initial public offering (IPO) market. Understanding the Indian IPO market can help answer…
Abstract
Purpose
This paper aims to review, discuss and synthesize the literature focusing on the Indian initial public offering (IPO) market. Understanding the Indian IPO market can help answer broader corporate finance questions. The growing number of IPOs in the Indian context, coupled with the increasing importance of the Indian economy in the global market, makes this review an essential topic.
Design/methodology/approach
The systematic literature review methodology was adopted to review 111 papers published between 2002 and 2021. The authors used the Preferred Reporting Items for Systematic Reviews and Meta-Analyses approach during the review process. Additionally, the authors use a bibliometric review methodology to examine the pattern and trend of research in this area of interest. Furthermore, the authors conduct a critical review and synthesis of the top 20 papers based on citations. The authors also use a co-citation network and manual content analysis method to identify key research themes.
Findings
This review helps in identifying major themes of research in this area of interest. The authors find that majority of the research has focused on IPO performance whereas post-IPO performance needs critical attention as well. The authors develop a comprehensive framework and future research agenda based on their discussion.
Research limitations/implications
Meta-analysis of the literature can be conducted to gain better insights into the findings of prior studies.
Practical implications
This review paper develops a comprehensive overview on Indian IPO market which can be of interest not only to Indian scholarship. India as an economy is increasingly gaining attention at the global level. Hence, the future research objectives as illustrated in the study can be of interest for the global scholarship also.
Originality/value
To the best of the authors’ knowledge, this is the first comprehensive review paper that examines, synthesizes and outlines the future research agenda on Indian IPO studies. This review can be useful for researchers, business policymakers, finance professionals and anyone else interested in the Indian IPO market.
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Chui Zi Ong, Rasidah Mohd-Rashid, Ayesha Anwar and Waqas Mehmood
The main purpose of this study is to examine the disclosure of earnings forecasts in firms' prospectuses to explain investor demands or, in other words, oversubscription rates of…
Abstract
Purpose
The main purpose of this study is to examine the disclosure of earnings forecasts in firms' prospectuses to explain investor demands or, in other words, oversubscription rates of Malaysian initial public offerings (IPOs).
Design/methodology/approach
Ordinary least squares and robust methods were used to examine cross-sectional data comprising 466 fixed-price IPOs reported for the period from January 2000 to February 2020 on Bursa Malaysia.
Findings
The results showed that IPOs with earnings forecasts obtained higher oversubscription rates than those without earnings forecasts. IPOs with earnings forecasts provide value-relevant signals to prospective investors about the good prospects of firms, resulting in an increase in the demand for IPO shares. For the IPO samples listed during the global financial crisis (GFC) period, IPOs with earnings forecasts had negative impacts on the oversubscription rates. These results were robust to quantile methods and the two-stage least squares method.
Research limitations/implications
The research findings provide fresh information for investors regarding the importance of earnings forecasts as a trustworthy signal of a firm’s quality when making share subscription decisions.
Practical implications
The regulator is advised to encourage issuers to include earnings forecasts in their prospectuses since such forecasts help to increase the demand for IPOs.
Originality/value
This study contributes to the literature by offering empirical evidence regarding the signalling impact of earnings forecast disclosures on investor demands for Malaysian IPOs. Moreover, this study provides evidence demonstrating the impact of earnings forecast disclosures on oversubscription rates of Malaysian IPOs during the GFC period.
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Arpita Agnihotri and Saurabh Bhattacharya
Leveraging signalling theory and institutional environment theory, this study aims to examine how the entrepreneurial orientation of emerging market firms impacts initial public…
Abstract
Purpose
Leveraging signalling theory and institutional environment theory, this study aims to examine how the entrepreneurial orientation of emerging market firms impacts initial public offering (IPO) performance.
Design/methodology/approach
The authors conduct regression analysis based on archival data from 312 firms’ IPOs in India.
Findings
The results in the Indian context suggest it differs from IPO performance in developed markets. In an emerging market context, the findings suggest that only competitive aggressiveness is valued by investors in IPOs. The findings further show that proactiveness and autonomy negatively influence IPO underpricing.
Research limitations/implications
The research propositions imply that, owing to institutional voids in emerging markets, investors’ risk propensity and, hence, rewarding a firm’s entrepreneurial orientation differ from those in developed markets.
Originality/value
Extant literature has given limited attention to the dynamics of entrepreneurial orientation and the effect of each dimension of entrepreneurial orientation on IPO performance in emerging markets.
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Emmadonata Carbone, Donata Mussolino and Riccardo Viganò
This study investigates the relationship between board gender diversity (BGD) and the time to Initial Public Offering (IPO), which stands as an entrepreneurially risky choice…
Abstract
Purpose
This study investigates the relationship between board gender diversity (BGD) and the time to Initial Public Offering (IPO), which stands as an entrepreneurially risky choice, particularly challenging in family firms. We also investigate the moderating role of family ownership dispersion (FOD).
Design/methodology/approach
We draw on an integrated theoretical framework bringing together the upper echelons theory and the socio-emotional wealth (SEW) perspective and on hand-collected data on a sample of Italian family IPOs that occurred in the period 2000–2020. We employ ordinary least squares (OLS) regression and alternative model estimations to test our hypotheses.
Findings
BGD positively affects the time to IPO, thus, it increases the time required to go public. FOD negatively moderates this relationship. Our findings remain robust with different measures for BGD, FOD, and family business definition as well as with different econometric models.
Originality/value
The article develops literature on family firms and IPO and it enriches the academic debate about gender and IPOs in family firms. It adds to studies addressing the determinants of the time to IPO by incorporating gender diversity and the FOD into the discussion. Finally, it contributes to research on women and outcomes in family firms.
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Reem Zaabalawi, Gregory Domenic VanderPyl, Daniel Fredrick, Kimberly Gleason and Deborah Smith
The purpose of this study is to extend the Fraud Diamond Theory to celebrity Special Purpose Acquisition Companies (SPACs) and investigate their post-Initial Public Offering (IPO…
Abstract
Purpose
The purpose of this study is to extend the Fraud Diamond Theory to celebrity Special Purpose Acquisition Companies (SPACs) and investigate their post-Initial Public Offering (IPO) stock market performance.
Design/methodology/approach
After obtaining a sample of celebrity SPACs from the Spacresearch.com database, fraud risk characteristics were obtained from Lexis Nexus searches. Buy and hold abnormal returns were calculated for celebrity SPACs versus a small-cap equity benchmark for time intervals after IPO, and multiple regression analysis was performed to examine the relationship between fraud risk features and post-IPO returns.
Findings
Celebrity SPACs exhibit Fraud Diamond characteristics and significantly underperform a small-cap stock portfolio on a risk-adjusted basis after IPO.
Research limitations/implications
This study only examines celebrity SPACs that conducted IPOs on the NYSE and NASDAQ/AMEX and does not include those that are traded on the Over the Counter Bulletin Board (OTCBB).
Practical implications
Celebrity endorsement of SPAC vehicles attracts investors who may not be properly informed regarding the risk characteristics of SPACs. Accordingly, investors should be warned that celebrity SPACs underperform a small-cap equity portfolio and exhibit significant elements of fraud risk.
Social implications
The use of celebrity endorsement as a marketing device to attract investment in SPACs has regulatory implications.
Originality/value
To the best of the authors’ knowledge, this paper is the first to examine the fraud risk characteristics and post-IPO performance of celebrity SPACs.
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Ghea Revina Wigantini and Yunieta Anny Nainggolan
This study aims to examine the relationship between the fear index and initial public offering (IPO) aftermarket liquidity in ASEAN during the bearish time, the COVID-19 pandemic.
Abstract
Purpose
This study aims to examine the relationship between the fear index and initial public offering (IPO) aftermarket liquidity in ASEAN during the bearish time, the COVID-19 pandemic.
Design/methodology/approach
This study uses random effect panel regression analysis using two proxies of IPO aftermarket liquidity, namely, volume and turnover, on data of 90 IPO companies in the ASEAN-5 countries over four study periods: 30, 60, 90 and 100 days, after their IPOs.
Findings
The results indicate that the COVID-19 fear index significantly affects liquidity for all periods. The fear index decreases the stock aftermarket liquidity of ASEAN-5 IPO companies. The findings are consistent with additional tests.
Originality/value
This study initiates research during the COVID-19 pandemic in ASEAN-5 countries. Furthermore, while the other studies examine the stock performance of existing listed companies, this study focuses exclusively on the liquidity of companies that went public through IPOs in 2020.
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The purpose of this article is to present the results of empirical research concerning the identification of the impact of the transfer of companies from the alternative market to…
Abstract
Purpose
The purpose of this article is to present the results of empirical research concerning the identification of the impact of the transfer of companies from the alternative market to the regulated market of the Warsaw Stock Exchange on their operating and net performance.
Design/methodology/approach
The study was conducted based on the empirical data of the companies that changed the listing place on the Warsaw Stock Exchange. Data regarding the years before the transfer were collected from the prospectuses of companies prepared mandatorily in connection with the transition to the regulated market. Data regarding the years of the event and subsequent years were obtained from companies' annual reports. As in other studies in the analysis, the operational metrics were used (operating return on sale, operating return on assets, total asset turnover), which was further extended to net profitability ratios (net return on ale, net return on asset, net return on equity). The significance analysis was based on the Student's t-test and Wilcoxon’s test.
Findings
The results show that before the transfer from the alternative market to the regulated market, companies improved financial performance. As a result of the change of listing venues, the results already collapsed in the year of the event. The downward trend continued in the following two years, with a noticeable improvement in the third year after the transfer.
Originality/value
The literature lacks such studies based on the Polish market. To the best knowledge of the author, this is one of the first studies in Poland showing the changes in operating and net performance of companies changing the stock listing venues. The research is based on a large group including all companies that have changed listing venues since the beginning of the alternative market in Poland. The article presents an original empirical result that can be used both by managers and investors in their decisions.
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Sahil Narang and Rudra P. Pradhan
This study aims to examine the reaction of anchor investors (AIs) to pre-IPO earnings management (EM). The authors use the unique detailed bid data from the Indian anchor…
Abstract
Purpose
This study aims to examine the reaction of anchor investors (AIs) to pre-IPO earnings management (EM). The authors use the unique detailed bid data from the Indian anchor experiment. The authors also study the reputed AIs’ EM detection ability and pricing behavior in response to pre-IPO EM.
Design/methodology/approach
The authors use unique AI bid data for 169 Indian IPO firms. Utilizing the logistic regression and Tobit regression models with industry and year-fixed effects, the authors examine the relationship between various measures of AI participation and proxies of short-term and long-term discretionary accruals.
Findings
The authors document that pre-IPO EM is positively associated with the likelihood of anchor backing but negatively related to the likelihood of reputed anchor backing. The findings indicate that AIs are misled by pre-IPO EM, but reputed AIs are not. The authors also observe that reputed AIs, compared to the non-reputed, pay less than the upper band with increasing EM. The findings are robust to using various AI measures and EM proxies.
Practical implications
The findings have significant implications for regulators in the implementation of AI concept in non-anchor markets and better implementation of policies in existing anchor settings. Findings can also be relevant for non-institutional investors in the IPO domain.
Originality/value
This is one of the few studies on institutional investors' IPO bidding behavior in response to pre-IPO EM. However, this is the first study to analyze AIs' IPO bidding behavior in response to pre-IPO EM.
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Fouad Jamaani and Abdullah M. Alawadhi
Driven by the anticipated global stagflation, this straightforward yet novel study examines the cost of inflation as a macroeconomic factor by investigating its influence on stock…
Abstract
Purpose
Driven by the anticipated global stagflation, this straightforward yet novel study examines the cost of inflation as a macroeconomic factor by investigating its influence on stock market growth. Thus, this paper aims to examine the impact of inflation on the probability of initial public offering (IPO) withdrawal decision.
Design/methodology/approach
The paper employs a large dataset that covers the period January 1995–December 2019 and comprises 33,536 successful or withdrawn IPOs from 22 nations with various legal and cultural systems. This study applies a probit model utilizing version 15 of Stata statistical software.
Findings
This study finds that inflation is substantially and positively correlated with the likelihood of IPO withdrawal. Results of this study show that the IPO withdrawal decision increases up to 90% when the inflation rate climbs by 10%. Multiple robustness tests provide consistent findings.
Practical implications
This study's implications are important for researchers, investment banks, underwriters, issuers, regulators and stock exchanges. When processing IPO proposals, investment banks, underwriters and issuers must consider inflation projections to avoid negative effects, as demonstrated by the findings. In addition, regulators and stock exchanges must be aware of the detrimental impact of inflation on competitiveness in attracting new listings.
Originality/value
To the best of the authors’ knowledge, this study is the first to present convincing evidence of a major relationship between IPO withdrawal decision and inflation.
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Amira Akl Ahmed, Bosy Ahmed Gamaleldin Fathy and Nagwa Abdl-Allah Samak
This article investigates the determinants of cross-section variation of initial public offerings' (IPOs) first-day returns in a sample of 710 issues across seven emerging markets…
Abstract
Purpose
This article investigates the determinants of cross-section variation of initial public offerings' (IPOs) first-day returns in a sample of 710 issues across seven emerging markets between 2013 and 2017.
Design/methodology/approach
Ordinary least squares regression (OLS) and the semi-parametric quantile regression (QR) technique are employed. QR enables to analyse beyond the explanatory variables' relative mean effect at various points in the endogenous variable distribution. Furthermore, parameter estimates under QR are robust to the existence of outliers and long tails in the data distribution.
Findings
Underpricing varies across countries with an average of 78%. According to the OLS results, independent variables explain 26% of the variation of IPOs' first-day returns. Findings show that employing QR is important, given the non-normality of the data and because each quantile is associated with a different effect of explanatory variables.
Originality/value
In addition to firm-specific, market-specific and issue-specific factors, the paper extends IPOs' underpricing literature through studying the impact of country-specific characteristics, largely neglected by literature, on IPO underpricing.
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