Search results

This study presents evidence concerning the effects of affective and cognitive rhetoric on the underpricing of firms at the time of their initial public offering. It is suggested that firms that use less affective, and more cognitively oriented discourse in their IPO prospectus will experience better underpricing outcomes. We examine these assertions using a sample of young high-tech IPO firms where investors rely on prospectuses as accurate and informative firm communications. Results from a robust five-year time span observe initial support for the hypothesized effects. Moreover, the signaling of a higher degree of entrepreneurial orientation in the firm prospectus is found to worsen the negative effects of affective discourse

The purpose of the paper is to investigate intangibles disclosure in Italian initial public offerings (IPO) prospectuses. It seeks to examine whether intangibles disclosure in IPO prospectuses is correlated to some firm‐specific variables, which influence the information selected by a company for its admission on the stock exchange.

The paper is an empirical analysis of intangibles disclosure in Italian IPO prospectuses, and in particular an analysis of its association with some firm‐specific variables through a regression model.

The paper finds that intangibles information is increasing in Italian IPOs. Firm size and pre‐IPO managerial ownership are associated with intangibles disclosure, while firm age and level of technology are not related.

The paper shows that the IPO disclosure could not be exhaustive of the intangibles disclosure provided by Italian companies, because it is produced on a voluntary basis. Originality/value – The empirical results indicate that intangibles disclosure is important in the capital markets assessment of firm value.

Although many theories aim to explain initial public offering (IPO) underpricing, initial-day returns of US Real Estate Investment Trust (REIT) IPOs remain a “puzzle”. The literature on REIT IPOs has focused on indirect quantitative proxies for information asymmetries between REITs and investors to determine IPO underpricing. This study, however, proposes textual analysis to exploit the qualitative information, revealed through one of the most important documents during the IPO process – Form S-11 – as a direct measure of information asymmetries.

This study determines the level of uncertain language in the prospectus, as well as its similarity to recently filed registration statements, to assess whether textual features can solve the underpricing puzzle. It assumes that uncertain language makes it more difficult for potential investors to price the issue and thus increases underpricing. Furthermore, it is hypothesized that a higher similarity to previous filings indicates that the prospectus provides little useful information and thus does not resolve existing information asymmetries, leading to increased underpricing.

Contrary to expectations, this research does not find a statistically significant association between uncertain language in Form S-11 and initial-day returns. This result is interpreted as suggesting that uncertain language in the prospectus does not reflect the issuer's expectations about the company's future prospects, but rather is necessary because of forecasting difficulties and litigation risk. Analyzing disclosure similarity instead, this study finds a statistically and economically significant impact of qualitative information on initial-day returns. Thus, REIT managers may reduce underpricing by voluntarily providing more information to potential investors in Form S-11.

The results demonstrate that textual analysis can in fact help to explain underpricing of US REIT IPOs, as qualitative information in Forms S-11 decreases information asymmetries between US REIT managers and investors, thus reducing underpricing. Consequently, REIT managers are incentivized to provide as much information as possible to reduce underpricing, while investors could use textual analysis to identify offerings that promise the highest returns.

This is the first study which applies textual analysis to corporate disclosures of US REITs in order to explain IPO underpricing.

This paper aims to summarize new disclosure and procedural rules and related guidance for initial public offerings in the UK that will become effective on July 1, 2018.

This study summarizes new disclosure and procedural rules and related guidance published by the Financial Conduct Authority intended to improve the quality and timeliness of key information made available to investors in advance of an initial public offering (IPO) in the UK, in particular the timing of the publication of IPO research by connected and unconnected analysts.

While it remains to be determined whether the new process will provide investors with more time to digest information about the issuer and its business and increase the likelihood that investors will place greater emphasis on the prospectus and less on research reports of connected analysts, at the very least, the publication of the prospectus or a registration document, rather than the intention to float announcement as is currently the case, will provide the first public confirmation that an IPO is imminent.

This study provides practical guidance from experienced securities and financial services lawyers.

The purpose of this paper is to investigate the extent of intellectual capital (IC) disclosure on the UK biotechnology initial public offering (IPO) prospectuses. The study is based on companies going public on the London Stock Exchange (LSE) and the London Alternative Investment Market (AIM) over the period 2005‐2007.

The extent of IC disclosure is collected and measured by using the IC disclosure index and the framework proposed by Bukh et al. The differences in the level of IC disclosure are analysed by modelling some firm‐specific determinants such as size, maturity, age and independence of the board.

It is shown that primary listing companies on the LSE disclose more IC information than those on the London AIM. Maturity and independence of the board are associated with IC disclosure, while size and age are not related, showing the importance of corporate communication as a signal of credibility to possible investors at IPO stage.

The main contribution of the paper is to analyse IC disclosure in the UK biotechnology IPO prospectuses. Previous literature does not focus on this reporting genre as an important corporate communication tool, as most research investigates IC disclosure only in annual reports and country regulation settings.

This study aims to investigate the factors influencing the disclosure of intellectual capital (IC) information in the Malaysian initial public offering (IPO) prospectus using multiple regression analysis.

The sample consists of 130 companies in the technology and industrial products sectors of Bursa Malaysia that went through an IPO between 2004 and 2008. Initially, the extent of the IC disclosure index is quantified using content analysis methodology. The multiple regression analysis is then used to examine the associations of nine potential explanatory variables with IC disclosure level.

In general, the results provide evidence that board size, board independence, age, leverage, underwriter and listing board significantly influence the extent of IC disclosure in an IPO prospectus. Nonetheless, the effect of each explanatory variable may vary in each estimated parameter of the multiple regression models. Three variables, board diversity, size and auditor, were not significant.

Although many studies have examined the content of and reasons for IC disclosures, this study provides empirical evidence in this specific area, i.e. to explore the determinants of IC disclosure, particularly from the perspective of IPO prospectuses, in emerging countries such as Malaysia.

Purpose – The purpose of this paper is to propose and illustrate the use of a set of rules to make an analytical reading of the indicators of an intellectual capital statement possible. Design/methodology/approach – The paper proposes a model to analyze intellectual capital statements and applies this model to an intellectual capital statement and an IPO prospectus, as these two reporting forms are suggested to be similar. Thus, they are analyzed using the same methodology. Findings – The paper demonstrates that it is possible to analyze prospectuses and intellectual capital statements systematically and even to compare companies on that basis. Since IPOs are often already part of the capital market's information, the similarities between reading IPOs and intellectual capital statement suggest that intellectual capital statements convey company‐specific information relevant for financial analysts. Practical implications – The paper presents an analytical model which can be used generally in the analysis of the intellectual capital statement and IPO prospectuses. Originality/value – The paper demonstrates the similarities between an intellectual capital report and an IPO prospectus. Further, the paper demonstrates the use of a theoretically anchored and practical, useful model for analysing disclosure in the narrative part of a financial report.

The purpose of this paper is to explain a recently adopted Ordinance (the “Reform Act”) and amendments to the General Regulation of the Autorité des Marchés Financiers (AMF) intended to improve the competitiveness of the French financial market and to harmonize the French regulatory definition of a public offering with the European Union definition under the Prospectus Directive.

The paper explains requirements of the European Union Prospectus Directive, related provisions of the French Reform Act, and certain clarifications provided by the Committee of European Securities Regulators (CESR); discusses the scope of the private placement exemption in France, including definitions of “qualified investors” and a “restricted group of investors”; explains the role of financial intermediaries and how their marketing activities must be structured to avoid losing the benefits of the private placement exemption; interprets loosely defined AMF policies on the resale of securities under the private placement exemption; details exemptions for investment service providers providing asset management for third parties and for “local” offerings; and explains limitations on the private placement exemption posed by the French public offering rules.

France has recently amended its public offering regime to further harmonize it with the Prospectus Directive and make the French financial market more attractive to foreign issuers. Additional amendments to the EU Prospectus Directive are expected, which will result in further changes to French private placement regulation.

The paper provides practical guidance from experienced corporate and securities lawyers.

The purpose of this paper is to give an indication of the quantity of intellectual capital information in Japanese initial public offering (IPO) prospectuses from all stock exchange listings on the Japan Stock Exchange from 2003.

The paper applied a disclosure index consisting of 78 items to quantify the amount of information regarding intellectual capital included in the IPO prospectuses of Japanese companies. An analysis of variance (ANOVA) was used to test, controlling for technological type of the company (high‐tech/low‐tech), and whether the extent of managerial ownership prior to the IPO, company age and company size influenced disclosure.

From the analyses conclusions are derived for four hypotheses. The hypotheses “industry differences” (H1), “managerial ownership” (H2) and “company size” (H3) were found not to be significant factors explaining voluntary disclosure of information. The fourth factor, “company age” (H4), did, however, have a significant influence on the extent of disclosure for Japanese companies. Further testing of the Japanese companies regarding age showed a continuing trend.

Although Japan has been strongly associated with the concept of the knowledge society, Japanese studies regarding intellectual capital have been very scarce. No studies, to the best of one's knowledge, have examined the specific disclosure of intellectual capital information included in Japanese IPO prospectuses.

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.