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This study aims to investigate the effects of the intended use of initial public offerings (IPO) proceeds that is disclosed in the prospectus on IPO initial returns.

A sample of IPOs listed on Bursa Malaysia from 2005 to 2015 is used. The intended use of IPO proceeds is categorised into three uses, namely, growth opportunities, debt repayment and working capital. In addition to ordinary least squares regression, the study applies a more sophisticated and robust approach using the quantile regression technique.

The results show that the intended use of IPO proceeds for growth opportunities and working capital is positively associated with IPO initial returns, whereas debt repayment is negatively associated with IPO initial returns. When the intended use of IPO proceeds for growth opportunities is further expanded into capital expenditure (CAPEX) and research and development (R&D), the intended use of IPO proceeds for CAPEX is positively associated with IPO initial returns, whereas R&D is negatively associated with IPO initial returns.

These findings suggest that intended use of IPO proceeds provides useful information about IPO initial returns and investors can use this information as guidance to make informed decisions. In addition, regulatory authorities should pay close attention to the amount allocated to each intended use of IPO proceeds as this may play a critical role in the success of a company and the economy.

This study gives new empirical evidence on the desire and motivations of IPO and the usefulness of designated use of IPO proceeds disclosed in the prospectus in explaining IPO initial returns.

The authors seek an answer to the research question: how do the disclosure of the intended use of initial public offering (IPO) proceeds and firm characteristics jointly influence IPO performance?

Data on the use of proceeds, firm age, size, high- or low-tech industry, and the length of the use of proceeds section were collected from 341 IPOs in the USA, UK, and Hong Kong. Fuzzy-set Qualitative Comparative Analysis was used to predict which configurations of IPO use of proceeds and firm characteristics consistently led to above-average IPO performance.

Ten configurations of causal factors were found to lead to above-average IPO performance. Disclosure of IPO proceeds use matters for IPO performance but is contingent on firm characteristics. Whether a firm is in a high- or low-technology industry along with its size and age have distinct effects on which intended uses of proceeds are beneficial and how long their intended proceeds section must be to lead to above-average IPO performance.

These findings contribute to a multidimensional view of IPO performance. The authors use information processing and a management perspective to see how the use of proceeds sections help frame an IPO’s equity story. The use of a configurational methodology and a management perspective shows how IPOs can be viewed as a bundle of attributes.

This study aims to identify why restaurant firms go public (IPO) despite high financing costs and which factors make firms stay public for the long term after an IPO. Also, this study aimed to link and compare restaurant firms’ pre- and post-IPO accounting information and how IPO proceeds were used.

This study used random-effects regression analysis with a number of dependent variables for a sample of 1,347 unbalanced panel data. In addition, logistic regression analyses were used to identify why restaurant firms were delisted within short periods after going public.

First, rebalancing financial structures was the most important reason for IPOs, whereas financing future growth was only a minor motivation. Second, post-IPO performance significantly differed between restaurant firms based on their pre-IPO financial conditions, as well as how they used IPO proceeds. Third, restaurant firms with low profitability, inefficient non-operating expenses and difficulties in generating revenue increased their financial burdens, which ultimately caused restaurant firms to be delisted within a short period after an IPO. Furthermore, the reasons for merging included cash shortages, large short-term liabilities and increased major operating expenses, together with increases in capital expenditures.

This study is unique, in that it explains the relationships between motivations for going public and post-IPO performances by directly linking the usages of IPO proceeds with firms’ operational performances. To the best of the authors’ knowledge, this study is the first to examine the effects of IPOs on restaurant firms’ operational, non-operational, investment and financial activities on firms’ performances.

The purpose of this paper is to investigate the real effects of primary and secondary equity markets on the post-issue operating performance of initial public offering (IPO) firms.

The author utilizes the intended use of proceeds as a proxy variable for the primary market and the investment-to-price sensitivity and the informativeness of stock prices as alternative proxy variables for the secondary market. The compositional data, and non-parametric quantile regressions which are more robust to outliers than standard least square regressions, are employed for Indonesian equity market over the period of 1999-2013.

While confirming that firm operating performance can be explained by the firm’s motivation to go public, the author also shows that the operating performance is positively affected by investment-to-price sensitivity and negatively affected by stock price informativeness. The stock prices affect investment decisions by the way that the more liquid a stock is, the more informative its price is, and the more relevant stock prices are in investment decisions. These findings still hold after controlling for ownership structure.

Departing from the existing literature, the author investigates the role of primary and secondary equity markets for firm performance in an integrated framework because both markets interact closely in reality. The author shows that public listed firms can benefit both from the capital-raising function of the primary market and from the informational role of the stock prices of the secondary market. A measure of stock price informativeness, 1−R², however, must be understood in the context of thin trading in the sense that the level of liquidity affects the level of stock price informativeness.

The extant literature on initial public offerings (IPOs) generally assumes that a high degree of pre‐IPO leverage serves as a positive signal of firm quality as it forces a firm's managers to adhere to tough budget constraints. The purpose of this paper is to question the validity of this assumption when it is indiscriminately applied to all firms, while other potentially important determinants of a firm's optimal capital structure are ignored. High‐tech versus low‐tech firms are specifically focused on.

Multivariate regression controlling is used for various firm and offer characteristics, market and industry returns, and potential endogeneity between investment bank rankings, price revisions, and under‐pricing.

It is found that debt only serves as a signal of better firm quality for low‐tech IPOs, as reflected in smaller price revisions and lower under‐pricing. For high‐tech IPOs, the effect of leverage is reversed: for these firms, higher leverage is associated with increased risk and uncertainty as reflected by higher price revisions and greater under‐pricing. The results remain significant after controlling for various firm variables as mentioned above.

The research results allow managers of high‐tech firms that contemplate going public to better understand the effect their company's capital structure will have on the pricing of their IPO. Prior research generally suggests that – irrespective of a firm's underlying characteristics – higher financial leverage results in lower under‐pricing. The findings highlight the falsity of this generalization and point out that it only holds for low‐tech firms. Firms that operate in a high‐tech sector, on the other hand, will leave less money on the table if they use equity rather than debt financing.

It is shown that leverage only serves as a positive signal for low‐tech firms. The IPOs of these firms generally undergo smaller price revisions and are less under‐priced than the IPOs of low‐tech firms that use little debt in their capital structure. While this result is consistent with earlier studies, it is show that the relationship between these variables reverses for high‐tech IPOs. Specifically, it is found that high‐tech IPOs with high leverage undergo larger price revisions and are more under‐priced than high‐tech firms with low leverage. In contrast to earlier findings, this suggests that for high‐tech IPOs, higher leverage implies increased ex‐ante uncertainty and risks.

The theory presented suggests that underwriters are both advisors and independent agents in the issuerʼs attempt to send “signals” of quality to investors by making pre-IPO organizational changes. These pre-IPO gambits are intended to increase IPO proceeds, and preemptively address potential investor concerns that would deter them from subscribing. These organizational changes initially can financially benefit founders, early investors and underwriters. But they can also have a longterm impact that some issuers, especially founders, would prefer to avoid. Utilizing signaling and resource-based power, we find that underwriter power is significantly associated with making pre-IPO gambits and lower levels of underpricing.

The purpose of this paper is to investigate which cross-country characteristics influence the going-public decisions and how the cultural values of the countries affect initial public offering (IPO) firms’ profitability and risk of financial distress.

Using a sample of privately held and firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, this paper applies probit model and ordinary least squares regression to examine which cross-country characteristics could affect the decision to go public and how cultural values affect the profitability and risk of IPO firms.[AQ1] In addition, to overcome multicollinearity concerns caused by the use of Global Leadership and Organizational Behavioural Effectiveness culture dimensions, this paper factor analyses the dimensions using principal component analysis.

The results are as follows. First, this paper finds that firms in tradition-oriented countries are less likely to go public, while firms in result-oriented countries are more likely to hold an IPO. Second, this paper finds that country characteristics (i.e. financial deepening and taxation) affect the going-public decision. Third, this paper documents that IPO firms in traditionally and result-oriented countries have positive profitability and less risk of financial distress.

This study is intended for all those European and Asian policymakers and managers who want to improve their knowledge about what different indicators can establish the decision of firms that going-public facing different stages of their lifecycle. Specifically, policymakers wishing to promote IPO-activity in their countries may find it useful to strengthen the set of formal-institutions both to reduce corporate-taxation and to reduce the uncertainty associated with first-time share issuance and investment in such initiatives. This study is also intended for managers of companies that are not yet publicly-traded on their national stock-markets to be helpful to their decision-making processes.

This paper aims to extend the growing literature on the effects of cross-country factors on economic decision-making in finance and particularly adds to research that investigates the influence of these factors on the IPO decision of European and Asian firms.

The purpose of this paper is to examine whether the online auction mechanism in the USA is more effective at pricing initial public offerings (IPOs) than the traditional book building process.

The analysis compares the performance of online auction IPOs with traditional IPOs issued in the same industry area and in the same year to assess the differences in first day mispricing and its persistence. The paper compares the characteristics of firms choosing the auction process relative to the traditional process. It also uses regression models to examine whether online auction IPOs had a significantly lower first day price increase than traditional IPOs.

The results indicate that for 60 percent of the auction IPOs, over 40 percent of the traditional IPOs issued in that year and in that three‐digit Standard Industry Classification (SIC) area had greater mispricing. The mispricing of online auction IPOs relative to traditional IPOs persist over time for 50‐80 percent of online auction IPOs. Regression analyses controlling for industry effects, year effects, size of the issue, and type of traditional underwriter (low, medium, and high volume underwriters) suggest that the auction's first day price surges are not significantly lower than those of traditional underwriters. Moreover, high volume traditional underwriters have statistically significantly higher first day price surges than low volume traditional underwriters, supporting the theory that they intentionally misprice to benefit their preferred clients. Firms choosing the auction process tend to be smaller in terms of the number of shares of their IPO and their annual sales than firms choosing the traditional IPO process. There is some overlap in industry sector and age, although this varies by year.

This paper suggests that the auction process may not be as efficient in pricing IPOs as was initially intended and that there are opportunities for further innovation and improvement.

The purpose of this paper is to examine whether the differences in men and women, such as risk aversion in decision making, can influence the amount of capital that the board of directors can allocate for investment opportunities.

This study sampled 212 IPOs over the period of 2005–2015 and employed the OLS and the quantile regression techniques to examine the impact of female directors on capital allocation.

The results show that women on corporate boards have a positive influence on the amount of capital an IPO company can allocate for investment opportunities. These findings suggest that the investment strategies of women in an emerging financial market, like Malaysia, may differ from women in other financial markets.

The presence of women on corporate boards plays an important role in board involvement in a company’s strategic decision at the time of the IPO. Therefore, regulators and IPO issuers should pay close attention to the corporate governance structure of a company at the time of an IPO. In addition, investors and other stakeholders of a company may consider women on corporate boards as an important factor in financing and investment decisions.

Despite several studies that have examined the influence of women on corporate boards on corporate outcomes, globally, the presence of women on corporate boards and their influence on corporate decision-making related to allocation of capital to investment opportunities, have not been fully explored in the IPO literature.

Roll‐up initial public offerings (IPOs) create a company to consolidate a number of smaller companies in a fragmented industry. The company that results has limited operational experience and must combine several small and diverse companies. These characteristics may increase the uncertainty of the offer. We find that roll‐up IPOs have higher initial returns than traditional IPOs, implying additional uncertainty. Additionally, roll‐up IPOs do not perform as poorly as other IPOs over the long run. This may be due to benefits from economies of scale and a higher degree of monopoly power.