Heterogeneous relationship between IPO return and risk across idiosyncratic variance characteristics

This paper analyzes the levels and changes in the post-IPO stock return volatility and provides insights into market responses to the presence of firm-specific risk. First, we document a negative relation between initial idiosyncratic volatility level and the post-IPO volatility change in that initially low volatility firms have more volatility increase and vice verse. This evidence suggests fundamental firm-specific changes after the IPO. Further, we find that underpricing and short-run post-IPO returns are positively related to the initial and corresponding idiosyncratic risk level. This finding suggests that underpricing compensates investors for acquiring costly information and firm-specific risk information is being incorporated into offer prices. Finally, we find that higher long-run post-IPO performance is related to both lower initial risk level and decreasing risk in the first year after the IPO.     

Analysis of Korean IT startups’ initial public offering and their post-IPO performance

Since the financial crisis in Korea, by focusing on core technology, IT startups have played an important role in the recovery of Korea’s economy through innovating technologies and creating new jobs. Even though there are many startups, it is not very common to reach the point of the initial public offering (IPO) and the post-IPO performance of the firms is mostly declining. Since it is rather difficult to apply conventional performance measures to very young firms, IPO has been used as a tool for performance evaluation. This study adopts the IPO as an early-stage measure for the performance of high technology startups. It is important to find out whether an earlier IPO of firms leads to a better performance and capability of firms. We investigate the relationship between the time to IPO of firms and their post-IPO performance for 3 years after their IPO by adopting samples of 79 information technology hardware firms founded after 1996 and listed between 2000 and 2004 in the KOSDAQ. Four determinant factors, including entrepreneurs’ experience, venture capital investment, startups’ technology sourcing, and technology portfolios which determine the firm’s time lag to getting to the IPO, are identified. The findings contain several results. First, the patent has positive effects on the firms’ performance after an IPO and on the firms’ growth before the IPO. Second, a faster technology acquisition via technology alliance has a positive influence on the firms’ IPO regardless of internal technologies. Third, concentrating on core technology, instead of diversifying can mature the startup firms faster. These indicate that a startup’s efficient initial strategy is critical for its performance and it enhances the credit and confidence of the market.     

The influence of private equity and venture capital on the post-IPO performance of newly-public acquirers

This paper examines the influence of private equity (PE) and venture capital (VC) ownership on the post-initial public offering (IPO) performance of newly-public acquirers. Our results show that acquirers with PE- or VC-backing at the time of the IPO perform better long-term than acquirers without such backing. More importantly, while acquirers without financial backing experience negative long-run returns from first-year acquisitions, acquirers with continued PE- and VC-backing perform significantly better when making acquisitions within the first year after going public. However, acquiring firms and investors should be aware that for mergers in the second and third year post-IPO, continued VC ownership has a detrimental long-term impact. In contrast, higher levels of continued PE ownership tend to have a positive relationship with long-run performance.     

盈余管理:创业板风险投资与ipo后市场表现的实证研究

文章以2009年10月30日到2010年12月31日期间上市的152家深圳创业板公司为研究样本,研究有无风险投资背景前提下,创业板公司IPO前是否存在正向盈余管理与IPO后市场表现之间的关系。实证结果显示:有风投背景上市公司盈余管理程度较无风投公司盈余程度低,差异显著;有风投背景的上市公司短期市场表现强于无风投公司,中期市场表现则与之相反。创业板公司存在正向盈余管理行为,且IPO前盈余管理和IPO后中短期市场表现呈负相关且差异显著。     

Venture capitalist participation and the post-issue operating performance of IPO firms

Previous studies have identified the value-added potential of venture capitalist monitoring in the initial public offering (IPO) market. We test this proposition by comparing the post-issue operating performance of venture capitalist-backed IPOs with a matched sample of non-venture capitalist-backed IPOs. We find that venture capitalist-backed IPO firms exhibit relatively superior post-issue operating performance compared to non-venture capital-backed IPO firms. Further, the market appears to recognize the value of monitoring by venture capitalists as reflected in the higher valuations at the time of the IPO. Finally, we find that proxies for the quality of venture capitalist monitoring are positively related to post-issue operating performance.     

Payout initiation by IPO firms: The choice between dividends and share repurchases

This study evaluates the economics of the choice of form of payout initiation mechanism adopted by IPO firms. Our results suggest that IPO firms demonstrate a preference for repurchases over dividends as the specific form of payout initiation mechanism. We however, find that while the market views post-IPO payout initiations favorably, it is indifferent to the specific form of payout mechanism adopted. Further, we find that dividends and repurchases represent distinct payout mechanisms adopted by IPO firms with fundamentally different characteristics and motivation to initiate payouts during the post-IPO phase. Our results suggest that while dividend initiations are primarily driven by life cycle and catering theory considerations, signaling theory provides the more likely explanation for payout initiations through share repurchases.     

Early internet IPOs versus subsequent entrants

This paper examines whether investors in early Internet IPOs earned superior returns to those who invested in later entrants. We document three differences between early public firms in a new Internet technology and their followers: underpricing, operating characteristics at the IPO, and stock price performance after the IPO. We find that there is value in going public relatively early in a new Internet technology. Specifically, long-term returns are significantly higher for the early entrants. We also find evidence, consistent with previous studies that examine hot IPO markets, that the early public firms have better operating characteristics at the IPO than later entrants.     

风险投资的政府背景对IPO的影响

中国的风险资本中政府资金一直占有较大比例,本文基于中小企业板数据研究政府背景风险投资对IPO抑价及IPO后收益是否有影响,实证结果发现政府背景风险投资对两者均没有显著影响.因此,政府不应过多地投资于风险投资,而应该完善风险投资的政策环境.     

中国上市公司IPO后经营业绩变化情况的分析——来自A股公司的经验数据

本文以1999￣2000年在沪、深两市首发上市的216家A股公司为样本,以这些公司从首发前一年延伸至2003年的数据,研究了中国A股上市公司IPO前1年至后3年的收入、成本、费用及效益的变化。研究发现:与上市前相比,中国A股公司IPO后的主营业务收入、主营业务成本、期间费用等绝对数指标均显著上升,而主营业务收入营业利润率却显著下降;造成业绩下降因素很多,其中最直接的主要原因是公司上市后成本、费用的大幅度上升。     

International takeover laws and corporate cash holdings

We examine the impact on corporate cash holdings of international merger and acquisition (M&A) laws, which facilitate corporate takeovers. We use the staggered enactment of M&A laws from 1992 to 2005 and a sample spanning 34 jurisdictions, and find that levels of corporate cash holdings increase after passage of M&A laws. We also find that firms with better operating performance, higher earnings volatility, higher P/E ratio, and in jurisdictions with high M&A intensity hoard more cash after the enactment of M&A laws. These firms decrease dividends and capital expenditure and increase cash-based acquisitions in the post-M&A law period. Additional analysis shows that the effect is manifested in the subsample of firms in jurisdictions with better institutional environments. Lastly, we find that investor valuations of cash holdings decrease after the enactment of M&A laws. Collectively, our results suggest that managers hoard cash to finance M&A activities after the enactment of M&A laws, driven by the motive of empire-building, and that cash hoarding behaviors are viewed by investors as value-decreasing.     

Motives and consequences of IPOs in cold periods

We analyze the motives and long-term stock price performance of firms that pursue IPOs in cold IPO periods. We find that firms are more likely to engage in an IPO during a cold period when their earnings are relatively high and are expected to decline in the future. We also find that IPO firms during a cold period are more likely to have managed their earnings prior to the IPO. Furthermore, we find that cold IPO firms experience significantly weaker stock price performance than hot IPO firms, and results are robust to different criteria for defining hot and cold IPO periods, different measures of stock price performance, and different investment holding periods. We find that investment opportunities, the backing of a venture capitalist, and an increase in earnings in the year of the IPO lead to significantly higher long term stock price performance of IPO firms. Our multivariate models confirm the adverse cold IPO period effect on stock price performance even after controlling for the IPO motives and the firm's earnings performance. Our results also hold within the post-Sarbanes-Oxley (SOX) era.     

Industry clustering of initial public offerings

Extant empirical evidence has documented both a temporal variation in the number of initial public offerings (IPOs) and an industry clustering effect in these offerings. This article attempts to provide insights into this phenomenon by: (i) identifying industry conditions that influence IPO clustering, (ii) analyzing differences in characteristics of clustered versus non‐clustered IPOs, and (iii) studying the impact of IPO clustering on long‐run operating performance. We find that IPO clustering is more likely to occur in high‐growth fragmented industries that are characterized by strong investment opportunities, favorable investor sentiment, and which require high levels of investments in R&D. Further, we document a negative relation between post‐IPO operating performance and whether the IPO firm goes public in its industry cluster period. We conclude that the relatively poor post‐IPO operating performance of firms that go public in industry cluster periods likely reflects industry overinvestment arising from too many firms within that industry chasing the same investment opportunities. Copyright © 2005 John Wiley & Sons, Ltd.     

募集资金投向对公司经营业绩的影响分析——来自上市公司的证据

本文以2000年、2001年、2002年通过首次发行股票、配股和增发来募集资金的上市公司为对象,对募集资金的投向与公司经营业绩之间的关系进行研究。结果表明:上市公司募集资金正常投向的比率与上市公司的经营业绩显著正相关,正常投向中主业投资有利于公司经营业绩的提高;对外投资与公司经营业绩在第一年有显著相关关系,但不具有持续性;偿还债务与公司业绩之间有显著负相关关系。募集资金变更投向与公司经营业绩之间有显著负相关关系,募集资金变更为对外投资和募集资金闲置与公司经营业绩显著负相关。     

Donating Money to Get Money: The Role of Corporate Philanthropy in Stakeholder Reactions to IPOs

This study examines how stakeholders' investment time horizons interact with information about corporate giving in initial public offering (IPO) firms. Specifically, we build a model that explains how corporate philanthropy affects IPO performance. We find that at the IPO‐preparation stage, corporate giving is negatively related to underwriter prestige, venture capital investment, and IPO financing costs. We also find that at the IPO‐issuance stage, negative media coverage of IPOs moderates the U‐shaped relationship between corporate giving and market premiums. At the IPO‐trading stage, we find that corporate giving only positively influences the market premiums for IPO firms that are the subject of negative media reports. Our findings contribute to the signalling theory by showing how various stakeholders interpret the same signals differently, and they have implications for understanding how the relationship between corporate philanthropy and corporate financial performance materializes in the IPO markets.     

上市公司IPO业绩实证分析——基于广西上市公司的思考

我国上市公司利用证券市场进行首次公开发行股权融资（Initial public offering,以下简称IPO）已经成为一种普遍现象,但上市公司往往存在着募资效率不高、资金闲置或滥用等问题。文章以广西上市公司为样本,运用会计指标法对其IPO绩效进行实证分析;运用主成分分析法对广西上市公司的绩效进行整体检验,探讨上市公司IPO后经营业绩变化的趋势和成因,并就提高广西上市公司IPO后的经营业绩提出了相关的政策性建议。     

The effect of cash holdings on firm performance in large Italian companies

This paper examines the relationship between cash holdings and performance in Italy over 36 years. Specifically, in light of the presence of conflicting evidence concerning the worth of cash stock, which could lead to a positive effect rather than a negative one, the role of moderating factors that can shape the magnitude of this relationship is investigated. The results show that the value of cash holdings is affected by firm‐specific characteristics, as well as factors related to the institutional context. Although other studies have analyzed moderators one at a time, this is the first work to consider how they jointly work. When the moderators are considered together, some of them become no longer statistically significant while others become even more economically and statistically relevant.     

Are venture capitalist-backed IPOs more innovative? Evidence from an emerging market

This study examines whether venture capital (VC)-backed IPOs are more innovative than otherwise equivalent non-VC-backed IPOs. Using manually collected R&D records from annual reports and patent data from the Chinese State Intellectual Property Office (CSIPO) from 2007 to 2012, we find that VC-backed IPOs have higher R&D expenditures and more patents granted in the three years after IPOs. More specifically, they have more invention, application, and design patents in post-IPO. We use a two-stage instrumental variable, propensity score matching, difference-in-differences approach to mitigate selection biases and find our results to be consistent with our hypothesis. We conclude that VCs can positively influence IPO firms to increase R&D expenditures and innovative output levels in China. In addition, we document that the government ownership adversely affects innovation of VC-backed firms. Policy implications are discussed.     

Which institutional investors matter for firm survival and performance?

Using data that spans three decades, we assess the diverse roles of institutional investors in impacting survival and performance of chronically underperforming firms and contrast the results for consistently overperforming firms. We find material differences in investor roles and investment returns between these samples. Differentiating among institutional types, controlling for prior performance and attrition bias provides insights unattainable by examining aggregated holdings. For underperformers, results are negative for activist pension funds and long-term institutions, positive for activist hedge funds and short-term institutions, and mixed for institutional blockholders.     

IPO承销费用的特征及券商的政治联系——来自中国IPO市场的证据

承销费用在世界各国普遍呈现出"集聚"的现象,我们对2004年-2009年通过发审委审核的上市公司的IPO承销费用进行研究,发现我国IPO承销费用也存在集聚现象,小规模IPO公司的承销费率主要集中在2%-6%之间,大规模IPO公司的承销费率集中在4%以下。另外,我们检验了券商的政治联系与承销费用的关系,研究发现有政治联系的券商比没有政治联系的券商收取了更高的承销费用。     

Influence of institutional investors' participation on flipping activity of Malaysian IPOs

This paper examines the influence of institutional investors’ participation on flipping activity of Malaysian IPOs. Measured as the percentage of trading volume on the first trading day against the total number of shares offered, flipping is the quickest way to gain huge profits from IPOs. However, excessive flipping activity has significant potential to create artificial downward pressure on the price of IPOs. One way to reduce such an adverse effect is by strategically allocating a larger proportion of new shares to institutional investors. This is because institutional investors are normally assumed to be long-term investors. As such, they are less likely to flip their allocated IPOs in the immediate aftermarket. The long-term investment argument is consistent with institutional investors’ preference for a steady income stream in the form of dividends. Drawing upon this argument, the greater participation of institutional investors during an IPO is expected to be an effective strategy to control aggressive flipping activity. The Malaysian IPO market offers an excellent opportunity to examine this hypothesis because data regarding the allocation of new shares to institutional investors can be traced conveniently through a type of IPO referred to as “private placement”. Based upon an examination of 248 IPOs listed on Bursa Malaysia between January 2000 and December 2012, this study finds a negative relationship between institutional investors’ participation and flipping activity. This result lends strong support to the argument concerning the effectiveness of institutional investors’ participation in controlling flipping activity in the Malaysian IPO market.