Underpricing, Overhang, and the Cost of Going Public to Preexisting Shareholders

Abstract:  IPO underpricing has been extensively studied; however, its impact on the wealth of preexisting shareholders has not been closely examined. We address the question of whether or not periods of high underpricing adversely affect preexisting shareholders. We find that high levels of underpricing are associated with increased share retention, which effectively offsets much of the potential cost. Overall, we find that the percentage of shareholder wealth lost is surprisingly stable over time, unlike underpricing itself. We also find that many factors known to be related to underpricing are not significant determinants of the cost of going public to preexisting owners.     

联合投资对IPO抑价的影响——来自创业板上市公司的经验证据

文章以2009年10月至2014年10月在创业板上市的公司为样本,通过建立多元线性回归模型,并采用Heckman两阶段模型解决内生性问题,考察了联合投资及其相关特质对被投资企业IPO抑价的影响。研究发现:联合投资比单一风险投资更能降低IPO抑价率,主导风投持股比例和声誉与IPO抑价率显著负相关,主导风投对被投资公司的投资时间与IPO抑价率负相关,但不显著。本文研究细化了风险投资相关研究,丰富了相关研究文献,同时验证了联合投资的\"认证理论\"在创业板发挥了显著作用,为企业引入风险投资策略选择提供了有益借鉴。     

Information Collection and IPO Underpricing

This study provides new evidence that IPO underpricing is economic rents paid for investor to gather costly information. Subrahmanyam and Titman (1999) report that diverse investor information, once aggregated in the public market, could provide a more informative stock price and accurate feedback to firm’s investment decision. I investigate the hypothesis that IPO underpricing as economic rents could be higher, when investor information is diverse. In support of this hypothesis, I find a positive and significant correlation between the extent of underpricing and the information diversity measure proposed by Barron et al. (1998). There is a positive and significant correlation between this information diversity measure and an IPO firm’s subsequent (absolute) change in capital and R&D expenditures. In addition, firms with high information diversity measure and change in subsequent investment exhibit a better subsequent return performance than firms with low diversity and change in investment. This is consistent with the proposition that investor information serves as useful feedback for managers in the IPO market.JEL Classification: G32     

Initial Public Offerings: Evidence from the British,French and Swedish Property Share Markets

This paper investigates the underpricing and long-run performance of initial public offerings (IPOs), using a unique sample consisting of 54 British, French and Swedish property companies, which became publicly listed during the period 1984–1999. Similar to common stock IPOs, the European property share IPOs in our sample outperformed the benchmark on the first day of trading, on average with 2.55 percent. However, these property share IPOs tend to underperform their benchmark over the twelve-month period subsequent to the initial offering. We also examine explanatory factors such as issue size, the degree of debt financing, ex-ante uncertainty, and the underlying property types of the companies involved. The results are in line with those previously found for common stocks.     

Initial and Long-Run IPO Returns in Central and Eastern Europe

ABSTRACT

This article provides original evidence on IPO underpricing and long-run underperformance in Central and Eastern Europe (CEE) and compares results to the European Union’s developed capital markets from 2000 to 2009. Using both index-adjusted and CAPM-adjusted returns, we find significant underpricing that is significantly higher than underpricing of comparable IPOs in the European Union’s developed capital markets. We show that the CEE’s initial IPO returns also exhibit significantly higher volatility. In line with the asymmetric information theory, we indicate that smaller IPOs in the CEE region have greater underpricing than the larger IPOs. Contrary to the literature, we unambiguously confirm long-run underperformance toward the benchmarks. In some model specifications, we also find that IPO long-run underperformance in the CEE region is less present than in the European Union’s developed capital markets.     

创业板市场IPO定价效率研究——来自香港市场的经验证据

本文对香港创业板市场IPO抑价现象进行了实证检验,研究表明,香港创业板IPO市场定价效率相对较低：风险投资家能够带领风险企业提前上市并得到投资者认同;IPO企业经营年限、价值不确定性及IPO发行时信息处理效率等变量对香港创业板IPO市场定价效率有显著影响：承销商、审计事务所的鉴证功能得不到体现;高效的IPO发行机制有利于创业板IPO市场效率的提高。     

机构投资者对IPO定价效率的影响分析

本文通过对沪深两地1996～2006年A股市场IPO样本的研究发现：IPO抑价率与IPO政策变量及机构投资者参与程度显著负相关。机构投资者参与询价和发行配售，对IPO抑价率的降低起到了显著作用，有利于提高市场发行定价效率。总体上看，现阶段中国A股发行市场定价效率仍然偏低。高抑价率的主要原因在于行政管制使股票发行人和承销商的议价能力发挥不足，根本原因还在于发行制度市场化程度不高。     

询价制下IPO抑价的成因分析

本文依据信息不对称理论对中国证券市场在询价制下IPO抑价的成因进行分析。本文结舍近期我国股市IPO的实际情况，对我国询价制下上市公司IPO抑价原因和应对策略进行探讨，以期为承销商提供有益的帮助。     

Do anti-corruption campaigns affect IPO underpricing? Evidence from a central discipline inspection of the CSRC in China

The system of central discipline inspections has become a key anti-corruption governance tool in China since 2013. This paper investigates the impact of a central discipline inspection of the China Securities Regulatory Commission (CSRC) on initial public offering (IPO) underpricing. We find that IPO firms listed during the inspection period exhibit greater IPO underpricing than those listed outside the inspection period. The reason is the increased focus of the CSRC on maintaining capital market stability, which makes it more inclined to approve IPO firms with lower issue prices during the inspection period compared with other periods. We also find that IPO firms listed during the inspection period have better short-term market performance but poorer long-term returns than those listed outside the inspection period. Moreover, the effect of the anti-corruption inspection on IPO underpricing is more pronounced for non-state-owned enterprises, firms with low-quality auditors and firms located in regions with high corruption. Overall, our paper enriches the literature on IPO underpricing and the economic consequences of the central discipline inspection system.     

IPO发行成本与中介机构声誉——来自中国创业板市场的证据

本文利用2009年10月23日中国创业板市场开板以来至2010年12月31日的153只IPO样本数据,研究了IPO发行成本与中介机构声誉之间的关系。实证结果表明:中介机构声誉对IPO直接成本有显著正影响,存在着明显的声誉溢价效应;中介机构声誉对IPO间接成本有显著负影响,承销商声誉越高,间接成本越低;由于间接成本占比较大,声誉的负向影响要大过正向影响,整体来看,中介机构声誉对IPO发行总成本有显著负影响。因此,从股票发行者成本控制的角度出发,本文结论支持发行者选择高声誉的中介机构。     

IPO initial returns in China: Underpricing or overvaluation?

This paper separates the amount of IPO underpricing(primary market underpricing) and overvaluation(secondary market overvaluation) from the value of an IPO's initial return to evaluate the relative importance of these two factors and their main determinants. Using data on the IPOs of 948 Chinese firms, we find that average initial returns are 66% and that underpricing and overvaluation are between 14–22% and 44–53%, respectively, depending on the method used to assess firms' intrinsic values. In addition, while both the value of the initial return and the extent of overvaluation are significantly negatively related to post-IPO long-run stock performance, overvaluation can predict post-IPO performance better than the value of the initial return. Value uncertainty in IPOs is positively related to both underpricing and overvaluation, and both the underwriter's reputation and the existence of pricing regulation are positively related to underpricing. Investor sentiment has a positive effect on overvaluation but has no effect or a negative effect on underpricing. Overall, our results suggest that in China overvaluation accounts for a larger proportion of the initial return than underpricing,and that underpricing and overvaluation have different determinants.     

询价制度第一阶段改革有效吗

询价制度第一阶段改革后,新股定价效率明显提高,证监会取消对发行价格的管制是新股定价效率提高的前提,询价对象竞争程度的增加是定价效率提高的根本动因;改革后,机构投资者择股效应显著,将定价效率提高所引发的部分投资风险转嫁给了中小投资者。中小投资者由改革前利益分配不公平转变为改革后风险分担不公平,定价效率进一步提高很可能引发中小投资者的赢者诅咒。发行制度未来改革应在注重提高定价效率的同时,限制机构投资者向中小投资者转嫁风险的能力。     

媒体语气、投资者情绪与IPO定价

本文利用IPO公司在上市前不同时间段内主流财经媒体报道中的正负面词汇数据,构建了媒体语气这一度量公司层面投资者情绪的代理变量,从个股层面检验投资者情绪对IPO抑价率的影响。本文研究结果表明,相比正面媒体语气,负面媒体语气能够更好地解释IPO抑价率、首日换手率以及超募比例。具体而言,我们发现负面媒体语气与IPO抑价率、IPO超募资金比例以及承销商费用占比均显著负相关:负面语气每下降1%,IPO抑价率上升0.22%,超募资金比例提高0.13%,承销商费用占比上升1.44%。我们进一步发现发行公司和承销商有动机和激励通过媒体推介IPO公司,引导、煽动投资者情绪,从而厘清投资者情绪的影响因素以及其作用于资产价格的渠道。本文最后验证了媒体语气作为投资者情绪代理变量的可靠性。     

创始人、创业投资与创业板IPO抑价

IPO高抑价是创业板市场的显著特征之一。本文从公司治理的视角,运用信息不对称和信号理论分析创始人、创业投资与IPO抑价之间的关系并进行实证研究。研究表明,创始人通过持股数量和兼任CEO具有一定的信号传递作用,降低了IPO抑价,而创业投资降低IPO抑价的作用并不显著。创业投资都具有低价发行保证上市成功的动机,创业投资存在只求上市,不求成长的现象。     

The Market for New Issues: Impact of Offering Price on Price Support and Underpricing

Previous studies have shown that the pattern of first day returns to initialpublic offerings is consistent with the hypotheses of underpricing and price support. We examine two different periods, 1975–1984 and 1996–2002, and find that in each case the measures of price support and underpricing are substantially affected by the initial public offerings' beginning price. During the period 1975–1984, the mean and standard deviation of returns to the price supported group are nearly always zero regardless of price, whileg the mean of the returns to the underpriced group is smile-shaped: high for low-priced and high-priced stocks but lower for stocks offered at intermediate prices. The patterns are different in the most recent data: the mean and standard deviation of both the price supported and underpriced groups are smile-shaped. For the lowest priced stocks, the measures in the later period mirror those for the 1975–1984 period, but for more expensive stocks the measures are substantially higher. The results apply to the first day returns of both firm commitment and best efforts offerings. Once price is taken into account, other than the difference in the probability of price support, the differences among offering types seem to be of secondary importance in explaining first day returns. JEL Classification: 1, G12, G24     

UK IPO underpricing and venture capitalists

We analyze the nature and causes of short-run underpricing for a unique sample of 591 Initial Public Offers (IPOs) issued on the London Stock Exchange for the period 1985–2003. We find significant differences between the 1998–2000 bubble years and the rest of the sample. Venture capitalists and reputable underwriters played a certification role in the latter period but not during the bubble years. These years featured significant increases in underpricing, money left on the table, and a decline in operating quality. The combination of venture capitalists and prestigious underwriters was increasingly associated with the highest underpricing witnessed during 1998–2000, which provides indirect support for the spinning hypothesis.     

U.S. banks’ IPOs and political money contributions

This study analyses the effect of political money contributions on U.S. banks’ IPOs. We employ unbalanced panel data of 367 U.S. banks’ IPOs for the period January 1998 to December 2019. Our findings reveal that investors perceive Political Money Contributions (PMC) by U.S. banks as a proxy for political reach and connectedness. We document an inverse relationship between total PMC and the level of underpricing, which implies that both lobbying and PAC expenditure pay off on issue day as donors incur less underpricing. Initial returns decrease with PAC contributions to House of Representatives candidates, whereas the returns relate to the partisan identity of the candidates receiving PAC contributions. We document that those individual contributions by directors bring significant benefits to the IPO banks. Finally, we show that the political contributions of board members, particularly those of CEOs and founders, are associated with better returns in the long term.     

Short- and Long-Term Performance of Polish IPOs

The paper documents short- and long-run performance of initial public offerings on the Warsaw Stock Exchange from 1998 to 2008. The study reveals positive initial market-adjusted returns of 13.95 percent and significant long-term underperformance with mean of -22.62 percent for the three-year buy-and-hold strategy. We introduce ordinary least squares regressions to find determinants of initial returns. Our findings document strong explanatory power of early aftermarket volatility, issuer's size, growth opportunities, and profitability before the offering. Moreover, those variables that can partly explain differences in initial returns can also help to shed light on the long-term underperformance issue. Our results are thus consistent with Miller's (1977) divergence of opinion hypothesis.