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This study examines the impact of the trading volume on Initial Public Offering (IPO) initial return in the context of an emerging market from January 2006 to December 2016. Models consist of hierarchical and multiple regressions have been evaluated. Our results show, firstly, IPO provides an average of 21.90% of initial return to investors on the first trading day, 9.08% of return on the second day of trading, and 7.12% of return on the third day of return. Secondly, there is a positive relationship between the oversubscription ratio and initial return and no relationship between trading volume and initial return on the first three trading day. Thirdly, the trading volume does not act as a moderator that worsens the relationship between the oversubscription ratio and initial return. Lastly, this study shows that investors should actively participate in the subsequent trading of an IPO. Higher participation will bring greater liquidity and shareholder wealth in the stock market. To the authors' knowledge, this is the first study on the moderating effect of trading volume on IPO initial return in an emerging market.

Within the past few years, a new phenomenon has taken place among the world's leading microfinance institutions (MFIs) – entry into new capital markets through initial public offerings (IPOs). “Going public” launches MFIs into a new frontier, not only presenting challenges but also providing new opportunities for the institutions and the clients they serve.

Using initial public offering (IPO) involuntary delisting data, this chapter examines whether and how motivated institutional investors affect the survivability of IPO firms. The empirical evidence shows that the likelihood of future delisting is much lower for IPOs with more motivated institutional investors. This impact is more pronounced for firms with higher information asymmetry. The motivated institutional investors also facilitate better post-IPO operating performance. The results are consistent with the prediction of the limited attention theory.

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.

This chapter investigates the cost of public debt for firms using a comprehensive sample consisting of 17,368 industrial bond issues from 1970 to 2011. The empirical evidence shows that yield spreads for seasoned bond issues are significantly lower than those for initial bond issues. This seasoning effect is robust across different sample periods, subsamples, and model specifications. On average, the yield spreads for seasoned bond issues are around 50 bps lower than those for initial bond issues. This difference cannot be explained by other bond and firm characteristics. The seasoning effect is more pronounced for firms with higher levels of uncertainty, lower information disclosure quality, and longer time intervals between the first and subsequent issues. Our empirical findings provide supportive evidence for the extant theories that aim to rationalize the information role in determining the cost of capital.

In M&A markets, acquirers face a hold-up problem of losing the value of investments they make in due diligence, negotiations, and post-acquisition planning if targets would pursue the options of waiting for better offers or selling to an alternative bidder. This chapter extends information economics to the literature on M&A contracting by arguing that such contracting problems are more likely to occur for targets with better outside options created by the information available on their resources and prospects. We also argue that acquirers address these contracting problems by using termination payment provisions to safeguard their investments. While previous research in corporate strategy and finance has suggested that certain factors can facilitate an acquisition by reducing a focal acquirer’s risk of adverse selection (e.g., signals, certifications), we note that these same factors can make the target attractive to other potential bidders and can exacerbate the risk of hold-up, thereby leading acquirers to use termination payment provisions as contractual safeguards.

This chapter investigates attention theory by examining retail investors' true intention to purchase. Attention theory indicates that investors, and especially retail investors, typically invest in stocks about which they are aware. Previous studies test attention theory by analyzing stock price behavior or trading volume. However, stock prices and trading volume are primarily driven by institutional investors rather than retail investors. We examine investor attention using initial public offering (IPO) subscriptions in Taiwan because only retail investors are allowed to subscribe to Taiwanese IPOs. We use media coverage as a measure of passive retail investor attention and Google search volume as a measure of active retail investor attention. Our results reveal that active attention has a more profound relationship with retail investor IPO subscriptions than passive attention does. Additionally, information about the value of IPOs taken from trading prices in the pre-IPO market mitigates the effects of attention theory.

This chapter investigates the relevance of accounting and other information to valuing Internet IPOs during the years 1998–2000 in Europe and the United States. We show that market value is negatively related to net income in the Internet bubble period before April 1, 2000 in both European and U.S. IPO markets. This is consistent with an Internet firm’s start-up expenditures being considered as assets, not as costs. Furthermore, for the U.S. IPO market, we find that free float is value relevant during the Internet bubble. Underwriters and issuers restricted the supply of shares at the IPO. This drove up market prices as investors were keen to buy Internet IPO shares.

This chapter investigates whether non venture-backed, venture-backed and bridge financed companies going public on Germany’s Neuer Markt differ with regard to issuer characteristics, balance sheet data or offering characteristics. Moreover, this chapter contributes to the underpricing literature by focusing on the role of venture capitalists and underwriters in certifying the quality of a company. Companies backed by a prestigious venture capitalist and/or underwritten by a top bank are expected to show less underpricing at the Initial Public Offering (IPO) due to reduced ex-ante uncertainty. This analysis provides evidence to the contrary: VC-backed IPOs appear to be more underpriced than non VC-backed IPOs.

Initial public offerings (IPOs) have been a focus of qualitative and quantitative research since the 1960s. However, the majority of research emanates from the fields of finance and management, with very little coming from the field of ethics. In this paper, we attempt to fill this gap by answering the question: Does the IPO process change a company’s ethical culture? In order to answer this question we examined S-1 filings made by companies before they went public. We used text-mining techniques to identify words that are uniquely related to corporate social responsibility (CSR) in those filings. We then used linear regression to compare those word counts to data produced by CSRHub. Companies that include words related to CSR tend to score better on various CSR measures. This evidence can support several explanatory theories, such as companies that take the time and effort to discuss CSR concepts in their S-1s make ethics a priority and therefore score higher on CSR ratings. Similarly, companies that had never formally thought about their ethical culture might feel, under the pressure of an IPO, to think about what kind of company the owners and leadership want it to be in the long run. Our study only analyzed companies three years post-IPO and did not control for certain variables. This paper is the first of its kind to discuss and, more importantly, attempt to quantify the impact of the IPO process on a company’s ethical culture. We hope that by understanding how the IPO process influences companies in terms of ethics, companies can more easily develop and maintain ethical cultures pre- and post-IPO.