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1 – 10 of 64Massimo Mariani, Mavie Cardi, Francesco D'Ercole, Nicola Raimo and Filippo Vitolla
Understanding the determinants of a corporate initial public offering (IPO) success is essential for reducing investors' valuation uncertainty when participating in share…
Abstract
Purpose
Understanding the determinants of a corporate initial public offering (IPO) success is essential for reducing investors' valuation uncertainty when participating in share offerings. In this sense, this study contributes to the existing debate by examining IPO prospectus readability. The authors specifically investigate how clear and more informative insights into pure corporate key financial numbers can lead to a higher valuation for the company after the listing process.
Design/methodology/approach
Through a sample of European IPOs, the authors employ a cross-sectional regression to test the relationship between prospectus readability through the Flesch reading ease (FRE) score and companies' market-to-book ratio at the period end date after the listing process.
Findings
The study findings show a positive impact of higher readability on the post-IPO market-to-book ratio. Thus, clear and more informative communication results in stocks being traded at a premium to their book value. This study presents a concrete call for firms to increase corporate documents’ readability to mitigate the risk of withdrawing or spoiling corporate market access. Specifically, enhanced clarity and transparency increase investors' confidence, facilitating a better understanding of companies' intrinsic value and the overall IPO process. The authors conducted several tests to validate the results.
Originality/value
To the best of the authors’ knowledge, this is among the first works to explore the relationship between the readability of corporate prospectus and the sustained IPO success in the European context.
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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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Wan Ahmad Fauzi Wan Husain, Mohamad Reeduan Mustapha, Yudi Fernando and Siti Aisyah Ahmad Zailani
The purpose of this study is to propose a world-class good governance ethics framework that leads to better corporate performance. ethics among managers, executives and members of…
Abstract
Purpose
The purpose of this study is to propose a world-class good governance ethics framework that leads to better corporate performance. ethics among managers, executives and members of the board of directors working in public-listed companies brings grave concern because of the increasing number of criminal acts reported by the Security Commission of Malaysia.
Design/methodology/approach
This study introduces a world-class good governance ethics framework for curbing criminal acts in public-listed companies in Malaysia. This study used a mixed method to gather data, and the methods used are appropriate for answering the research questions based on the World-Class Good Governance Ethics framework.
Findings
The finding of this study reveals high expectations for a corporate organization to improve individual and team performance while undertaking their corporate responsibilities, and a matter of choice, to adopt world-class good governance ethics in their policies and practices.
Practical implications
This study could be a reference for corporate management to regulate policies monitoring management's and employees' conduct at the workplace. This study's theoretical and practical significance would guide the stakeholders in corporate management to regulate governance policies based on the right ethical values and promote personalities with high integrity in management conduct.
Originality/value
This study promotes a world-class good governance ethics framework in curbing criminal acts for better corporate performance. This new framework is formulated based on the concept of a caliph and other essential elements envisaged by the Quranic verses.
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Fouad Jamaani, Manal Alidarous and Esraa Alharasis
This study aims to examine the impact of the International Financial Reporting Standards (IFRS) mandate and differences in national institutional quality on the underpricing of…
Abstract
Purpose
This study aims to examine the impact of the International Financial Reporting Standards (IFRS) mandate and differences in national institutional quality on the underpricing of Initial Public Offering (IPO) companies.
Design/methodology/approach
Multiple Difference-in-Differences (DiD) ordinary least squares estimations were conducted for 100 corporations listed on the Saudi Arabian stock market using country-level institutional quality data from 2005 to 2017.
Findings
IFRS requirements and improvements in institutional quality have a combined effect on minimizing IPO underpricing. The analysis of the combined impact of IFRS requirements and differences in transparency revealed that IPO vendors leave $5 on average for IPO investors to cash out post the IFRS mandate, compared to $29 previously. Thus, IFRS serves as a quality certification instrument that alleviates IPO investors’ ex ante uncertainties, even in nations with undeveloped institutions.
Practical implications
The findings may be beneficial to researchers and policymakers. The results suggest that institutional quality enhancements and obligatory IFRS implementation highlight IFRS’s synergistic influence on the IPO market. While European harmonization efforts drove the adoption of IFRS in Europe in 2005, Saudi Arabia’s adoption of IFRS is not being driven by such initiatives (Daske et al., 2008; Persakis and Iatridis 2017). In reality, when IFRS was officially imposed in Saudi Arabia in 2008, it, like many other emerging market nations, made considerable reforms to its formal institutions. However, research on the combined impact of IFRS and disparities in institutional quality in emerging IPO markets remains sparse. Emerging markets represent more than half of economies that use IFRS. Therefore, to the best of the authors’ knowledge, this study is the first to conduct an empirical investigation to identify this combined effect in emerging countries using the DiD analytical technique. Equity market legislators remain concerned regarding IPO underpricing, as it has a detrimental influence on economic growth (Bova and Pereira, 2012; Jamaani and Ahmed, 2021; Mehmood et al., 2021). Depending on the degree of information asymmetry in national stock markets, underpricing costs increase the cost of going public for entrepreneurs. Consequently, prospective private firms are discouraged from accessing equity financing through the stock markets. This is likely to impede private sector development plans, causing a negative effect on economic growth.
Originality/value
Emerging countries represent over 50% of the IFRS mandating economies. However, there is insufficient research on the combined effect of IFRS requirements and improvements in institutional quality in developing IPO markets. To the best of the authors’ knowledge, this study is the first empirical attempt to identify this combined effect in one of the largest developing countries. The results may aid academics and policymakers in better understanding the interaction between these two variables.
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Khurram Shahzad, Shakeel Ahmad Khan and Abid Iqbal
The objectives of the study were to identify the effects of blockchain technology (BT) on the university librarians, the impact of BT on the university library services and to…
Abstract
Purpose
The objectives of the study were to identify the effects of blockchain technology (BT) on the university librarians, the impact of BT on the university library services and to reveal the challenges to adopt BT in the university libraries.
Design/methodology/approach
A systematic literature review was applied to address the objectives of the study. Around 25 studies published in peer-reviewed journals were selected to conduct the study.
Findings
The findings of the study revealed that blockchain technology (BT) has positive effects on the university librarians as it assists them in digital resources management, provision of integrated library services, effective records management and continued professional development. The study also displayed that BT has a positive impact on the university libraries through effective information management, user privacy, collaboration, technological innovation and access control. Results also revealed that technical issues, financial constraints, security problems, skill issues and sociocultural issues created challenges to adopt BT in the university libraries.
Originality/value
The study has offered theoretical implications for future investigators through the provision of innovative literature on the prospectus and challenges associated with blockchain in the context of librarianship. The study has also provided practical implications for management bodies by offering recommendations for the successful adoption of blockchain in the university libraries. Additionally, a framework has been developed to adopt BT successfully in the university libraries for the delivery of smart library services to library patrons.
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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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Poonam Mulchandani, Rajan Pandey, Byomakesh Debata and Jayashree Renganathan
The regulatory design of Indian stock market provides us with the opportunity to disaggregate initial returns into two categories, i.e. voluntary premarket underpricing and post…
Abstract
Purpose
The regulatory design of Indian stock market provides us with the opportunity to disaggregate initial returns into two categories, i.e. voluntary premarket underpricing and post market mispricing. This study explores the impact of investor attention on the disaggregated short-run returns and long-run performance of initial public offerings (IPOs).
Design/methodology/approach
The study employs regression techniques on the sample of IPOs listed from 2005 to 2019. It measures investor attention with the help of the Google Search Volume Index (GSVI) extracted from Google Trends. Along with GSVI, the subscription rate is used as a proxy to measure investor attention.
Findings
The empirical results suggest a positive and significant relationship between initial returns and investor attention, thus validating the attention theory for Indian IPOs. Furthermore, when the returns are analysed for a more extended period using buy-and-hold abnormal returns (BHARs), it was found that price reversal holds in the long run.
Research limitations/implications
This study highlights the importance of information diffusion in the market. It emphasizes the behavioural tendency of the investors in the pre-market, which reduces the market efficiency. Hence, along with fundamentals, investor attention also plays an essential role in deciding the returns for an IPO.
Originality/value
According to the best of the authors’ knowledge, this is one of the first studies that has attempted to explore the influence of investor attention and its interplay with underpricing and long-run performance for IPOs of Indian markets.
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Benny Hutahayan, Mohamad Fadli, Satria Amiputra Amimakmur and Reka Dewantara
This study aims to analyze the causes and implications of legal uncertainty in the issuance of conventional municipal bonds in Indonesia and to draw lessons from Vietnam’s…
Abstract
Purpose
This study aims to analyze the causes and implications of legal uncertainty in the issuance of conventional municipal bonds in Indonesia and to draw lessons from Vietnam’s approach in providing better legal certainty.
Design/methodology/approach
This study adopts a normative legal method with a legislative approach and applies a comparative approach. Data sources involve primary and secondary legal materials from both Indonesia and Vietnam.
Findings
The legal uncertainty is caused by a lack of coherence and consistency in legislation. Based on Vietnam’s experience, Indonesia can gain valuable insights related to providing strong legal certainty for parties involved in issuing or investing through conventional municipal bonds.
Research limitations/implications
This study focuses on the comparative legal analysis of conventional municipal bonds in Indonesia with Vietnam.
Practical implications
This research provides recommendations for the refinement of legislation regarding conventional municipal bonds to the government.
Social implications
This study is related to legal certainty as a strategy to attract investment through municipal bonds and to ensure the municipal bond issuance process is transparent and efficient.
Originality/value
This study provides a comparative perspective on the issuance of municipal bonds in Indonesia, with a special focus on Vietnam, emphasizing the urgency of harmonization in legal regulation and the sustainability of legal certainty.
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Muhammad Jawad Haider, Maqsood Ahmad and Qiang Wu
This study examines the influence of investor protection on stock price crash risk (SPCR) in Asian economies.
Abstract
Purpose
This study examines the influence of investor protection on stock price crash risk (SPCR) in Asian economies.
Design/methodology/approach
This study used yearly data from 432 nonfinancial companies publicly listed firms in six countries (i.e., China, India, Pakistan, Hong Kong, Japan and Singapore) from 2007 to 2020 to investigate the relationship between investor protection and the risk of stock price crashes. The hypothesis was tested using a generalized least square panel regression.
Findings
The results suggest that investor protection significantly affects SPCR in Asian economies. Furthermore, the findings show that the stocks of firms whose investors received the best protection were less prone to crash in developed Asian economies. However, in developing Asian economies, the stocks of firms whose investors received the best protection were more prone to crashes.
Practical implications
It provides awareness and understanding of how the level of investor protection affects SPCR, which could be useful for decision-makers and professionals across a spectrum of financial and non-financial institutions, such as portfolio managers and traders in commercial banks, investment banks and mutual funds. This knowledge enables informed decision-making and the formulation of effective policies to manage stock market volatility.
Originality/value
This study appears to be the first of its kind to focus on the link between investor protection and SPCR within the specific context of developed and developing Asian economies.
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V.P. Priyesh and Lukose P.J. Jijo
This study investigates the impact of pre-IPO earnings management on investor demand in the Indian IPO market. It also examines whether earnings management by issuer firms affects…
Abstract
Purpose
This study investigates the impact of pre-IPO earnings management on investor demand in the Indian IPO market. It also examines whether earnings management by issuer firms affects IPO valuation, a topic that is underexplored in accounting research.
Design/methodology/approach
The study uses the data of 310 IPOs from India during the period 2000–2021. The association between pre-IPO earnings management with investor demand and valuation is tested using cross-sectional ordinary least squares regression models with heteroscedasticity-robust standard errors.
Findings
The study finds that the degree of pre-IPO earnings management impacts retail investor demand, measured as their over-subscription multiple. Pre-IPO earnings management is unrelated to institutional investor bidding. Further, this paper suggests no relation between pre-IPO earnings management and IPO valuation.
Research limitations/implications
Future studies could explore various other forms of earnings management and their impact on investor demand and valuation.
Practical implications
The findings of this study will help the investors and regulators to understand the practice of earnings management among IPO firms and how it is related to IPO demand and valuation.
Originality/value
This study contributes to the existing literature on IPO-earnings management and investor demand by documenting that issuer firms engage in earnings management to influence investor demand, particularly retail investor demand. Analysis of IPO valuation reveals that earnings management is mostly unrelated to IPO valuation, contrary to the general perception in the literature.
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