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.     

Time-Limited Property Rights and Investment Incentives

Although it is axiomatic that property rights of infinite duration are necessary for owners to make efficient long term investments in their property, time limits on property rights are pervasive in the law. This paper provides an economic justification for such limits by arguing that they actually enhance property values in the presence of imperfect information. In so doing, the analysis offers a coherent approach for understanding what otherwise appear to be unrelated doctrines in the law.     

Financial Expert CEOs and Earnings Management Around Initial Public Offerings

This study examines the association between financial expert CEOs and earnings management (EM) around initial public offerings. We identify financial expert CEOs as those having past experience in either banking or investment firms, large auditing firms, or finance-related roles. We find strong evidence that newly listed firms with financial expert CEOs are less likely to engage in either accrual-based or real EM in the offering year than those with non-financial expert CEOs. In particular, our results are robust after controlling for the potential selection issue that occurs due to non-random matching of CEOs to firms. In addition, we employ alternative measures of financial expertise, including past experience in a CFO position, financial experience variety, and professional qualifications. We document that CEOs who used to work as CFOs and those who gained varied financial experience are less likely to manage earnings through both accruals and real activities. Moreover, CEOs who have a professional qualification in finance and/or accounting are also associated with lower accrual-based EM.     

Initial Public Offerings in Australia 1994 to 1999, Recent Evidence of Underpricing and Underperformance

This paper analyses whether financial and non financial characteristics of Australian initial public offerings (IPOs) can explain observed underpricing and long term underperformance over the period 1994 to 1999. A number of previous Australian studies have investigated initial day underpricing and longer term underperformance of IPOs and this study updates those papers. We find that initial day underpricing can in part be explained by market sentiment, forecast dividend per share yields, underwriter options and share options. Our longer term analysis supports the finding of previous studies in that IPOs on average, underperform the market in the first year following their listing.     

Underpricing and Firm Quality in Initial Public Offerings: Evidence from Singapore

Firms seeking initial public listings on the Stock Exchange of Singapore can choose between offering their shares at a fixed price or selling them in two tranches: the first tranche is offered at a fixed price while the issue price of the second tranche is determined via a tender system. Consistent with the existing signalling literature, tendering IPO firms underprice their fixed price tranche more than non-tendering IPO firms. The underpricing in the fixed tranche is recouped through higher proceeds from the tender tranche. Our evidence suggests that IPO firms use the tender option to signal superior firm quality.     

Development Involvement and Property Share Performance: International Evidence

This paper concerns the dilemma whether regulators should preclude tax-exempt property investment companies from engaging in property development activities. We analyze the economic effects of combinations of property investment and property development by looking at the performance of an international set of property investment companies with varying degrees of involvement in property development. We study the five most important listed property markets in the world: the United States, Hong Kong, Australia, the United Kingdom and France. We examine the extent to which property investment companies participate in development projects by dividing the book value of their development projects by total assets. These development ratios yield remarkable differences both within and across national samples, with national averages varying between 2.23 percent for the United States and 21.34 percent for our Hong Kong sample. Analysis of property share performance yields results that consistently indicate that the cluster of property companies most involved in development projects is associated with both the highest total return and the highest systematic risk. We also find a weak positive link between development involvement and the Jensen alpha of property shares. The statistical significance of this link varies by country, with strong results for Hong Kong and Australia and less compelling results for the United States, the United Kingdom and France. Besides analyzing the stock performance of the companies in our samples we also focus on their operational profitability. Again, we consistently find both the highest and most volatile performance for companies actively participating in property development projects.     

Finance and Property Rights: Exploring Other Directions

There is a consensus that stronger property rights advance financial development. We provide evidence that the reverse hypothesis is also true. We isolate the structural component in the finance–property rights relationship using an instrument for financial development (private credit) based on an index of exposure to foreign crises, in addition to generalized method of moments approaches for panel data. Our results suggest a one standard deviation increase in private credit from its average in 2005 translates into a 0.5‐ to 1.0‐point increase in property rights. To contextualize this, the difference in property rights between Israel and Uruguay, two countries separated by about one standard deviation in the volume of private credit, was 0.67 points.     

The Timing and Subsequent Performance of Initial Public Offerings (IPOs) on the Johannesburg Stock Exchange

Companies that have listed on the Johannesburg Stock Exchange by means of a public offering between 1980 and 1991 have subsequently performed poorly. This long run post issue performance is remarkably consistent with the South African evidence for seasoned rights issuing companies and the international evidence for both initial public offerings (IPOs) and seasoned equity offerings (SEOs). Over the four years post issue, the newly listed companies earned an average return of 18.0% as opposed to 81.5% for a size-matched sample of seasoned companies. This study adds to the increasing body of international evidence suggesting the IPO under performance 'puzzle' referred to by Ibbotson (1975), Loughran and Ritter (1995) and Spiess and Affleck-Graves (1995) is not simply sample or country specific.     

Seasoned Equity Offerings: Stock Market Liquidity and the Rights Offer Paradox

This paper examines the impact of market liquidity on seasoned equity offerings (SEO) characteristics in France. We find that, besides blockholders’ takeup, liquidity is an important determinant of SEO flotation method choice. We document higher direct equity offering flotation costs, but also improved stock market liquidity after public offerings and standby rights relative to uninsured rights. After controlling for endogeneity in the choice of SEO flotation method, we find that pure public offerings and standby rights are comparable in terms of direct costs and liquidity improvement. Our results provide new insights as to why firms choose public offerings despite apparently higher costs.     

我国高科技企业发展与自主知识产权问题研究

知识经济背景下发展起来高新技术及其产业在经济增长、国家竞争中的作用日益凸显。本文指出了在改革开放30年的历史进程中我国高科技企业虽然己经取得了较大的发展,但却存在着核心竞争力不足的现实问题,主要体现为缺乏自主知识产权的技术支撑,在此基础上分析了自主知识产权与高新技术企业发展问题的原因,并提出了发展我国高新技术企业的对策。     

地方性银行产权结构、贷款供给与地方经济发展

从经济增长和经济效率两个维度衡量地方经济发展,在对地方性银行产权结构、贷款供给与地方经济发展关系进行理论分析的基础上,采用我国67家地方性银行的数据,实证研究在贷款供给促进地方经济发展方面,不同产权性质的地方性银行是否具有差异;并进一步分析城商行与农商行在促进城市和非城市经济发展方面的差异性。研究发现:地方性银行提供的贷款越多,地方经济增长速度越快,地方经济效率也越高。在贷款促进地方经济增长方面,国有与非国有控股银行的作用无明显差异,但在贷款促进地方经济效率提升方面,国有控股银行的作用弱于非国有控股银行。城商行和农商行的贷款均能有效促进市辖区的经济发展,且作用效果无明显差异,但它们均未能明显促进非市辖区的经济发展。     

Long-Run Operating Performance of Initial Public Offerings in Japanese Over-the-Counter Market (1991–2001): Evidence and Implications

This paper implements a comprehensive study on the long run post-issue operating performance of more than 700 initially public offerings (IPOs) in the Japanese over-the-counter market (JASDAQ) from 1991 to 2001. Empirical results document dramatic and continuing operating underperformance that are robust to industry or mean reversion adjustment. The diagnostic tests for behavioral explanations further uncover the salient decline of market expectations by various measures over the post issuing years, as well as the upsurge in company expansion around the offering years followed by the striking dwindle soon afterwards. These findings jointly shed light on the systematic over-optimism of market investors and managers at the time of IPO events. The multiple regression analysis also demonstrates robust evidence that is favorable for the hypotheses of “Windows of Opportunity” and market timing. In contrast, we do not find that there are significant associations between changes in alternative insider ownership and the evolution of operating performance. We suggest the explanations based on the agency problem theory are not effective in explaining the long run operating underperformance of JASDAQ IPOs.JEL Classification Code: G30, G31, D80, D84     

Property and Inflation: The Hedging Characteristics of U.K. Commercial Property, 1967–1994

This paper examines the statistical similarities between U.K. commercial property capital and rental values and the price level. Our aim is to determine whether commercial property is an inflation hedge and, if so, what type of inflation it hedges against. To answer these questions, we use both a multivariate unobserved components model and structural vector autoregressions. We find that commercial property is an inflation hedge but only a weak one. More specifically, we find that property offers some form of partial hedge against changes in the underlying inflation rate but not to either temporary or permanent changes to the price level. We also find that capital values offer a stronger hedge than rental values and that industrial and retail property account for most of this hedging capacity. We find no evidence that property responds differently to high or low inflation but we do find capital and rental values respond more to unexpected inflation than anticipated price changes.     

Predation,Protection, and Accumulation: Endogenous Property Rights in an Overlapping Generations Growth Model

We study a simple growth model with overlapping generations in which property rights are insecure. Insecurity of property rights leads to predation. Due to predation some of the resources are used for protection purposes. Both predation and protection remove resources from the accumulation process. In the model individuals allocate their labor between working for firms and appropriating output from them. Firms allocate their capital between production and protection. Without government, the model generates a unique but inefficient equilibrium. We show that in this equilibrium the level of output is increasing in the rate of effectiveness of protection, the relative utility of honesty, and the discount rate. Further, the equilibrium level of output is dynamically inefficient. We then extend the model to include a government as the sole provider of the public good “protection”. Protection is assumed to be financed by a capital tax imposed on firms. The model then yields multiple equilibria, with both a stable high-protection low-predation equilibrium, and a stable low-protection high-predation equilibrium. Which equilibrium a country is most likely to achieve, and how difficult it is for a country to move to the more desirable low-predation high-protection equilibrium, depend crucially on the parameters of the model describing the economy’s institutional structure. Hence, the results of the model support the emphasis placed by the World Bank on the importance for growth of strengthening institutional structures in developing countries.JEL Code: D23, D90, O41     

The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe

We investigate the relation between ownership structure and firm performance in Continental Europe, using data from 675 publicly traded corporations in 11 countries. Although family‐controlled corporations exhibit larger separation between control and cash‐flow rights, our results do not support the hypothesis that family control hampers firm performance. Valuation and operating performance are significantly higher in founder‐controlled corporations and in corporations controlled by descendants who sit on the board as non‐executive directors. When a descendant takes the position of CEO, family‐controlled companies are not statistically distinguishable from non‐family firms in terms of valuation and performance.     

Implied Volatility in the U.K. Commercial Property Market: Empirical Evidence Based on Transaction Data

The primary aim of this research is to compute implied volatility based on a stochastic contingent claim valuation model proposed by Dixit and Pindyck (1994). Over the sample period of 1984 to 1997, and with approximately 20,000 commercial property transactions in the United Kingdom, we find that implied volatility of rental returns is in the region of 24.83 percent. Over the same sample period, the historical and conditional standard deviations of the log returns of transaction-based rental series is estimated to be 15.60 percent and 35.64 percent, respectively. The tests of information content of these risk measures show that there is strong orthogonality in the information impounded in implied volatility estimates compared to that contained in historical standard deviations.     

Long-horizon abnormal performance following rights issues and placings: Additional evidence from the U.K. market

We revisit the long-horizon abnormal performance of U.K. firms following rights issues and placings over the period 1989-1997. We make the following contributions relative to prior research. First, we use, as far as we are aware, a more comprehensive data set of rights issues and placings than hitherto studied for the U.K. market. We thus exploit the fact that issuing new equity predominantly through rights issues is a feature of the U.K. equity market that differs from the U.S. and other markets, where public offers dominate seasoned equity issues. Second, we study both the pre- and post-offer long-horizon performance, complementing previous research that focuses only on announcement-day wealth effects. Third, we apply various metrics and revisit the evidence of long-horizon post-offer underperformance reported in previous research. We find, however, little evidence of long-horizon post-offer underperformance for U.K. firms following issues of equity through rights issues or by placings.     

The Amount and Timing of Goodwill Write-Offs and Revaluations: Evidence from U.S. and U.K. Firms

This paper investigates criticisms that U.S. GAAP had given firms too much discretion in determining the amount and timing of goodwill write-offs. Using 1,576 U.S. and 563 U.K. acquisitions, we find little evidence that U.S. firms managed the amount of goodwill write-off or that U.K. firms managed the amount of revaluations (write-ups of intangible assets). However, our results are consistent with U.S. firms delaying goodwill write-offs and U.K. firms timing revaluations strategically to avoid shareholder approval linked to certain financial ratios.     

Step Interventions and Market Integration: Tests in the U.S., U.K., and Australian Property Markets

Market integration implies the existence of some long-run equilibrium relationship between markets such that movements in one market are transmitted to movements in another. It is an interesting observation of much of the literature regarding a possible relationship between real estate and stock markets that there is relatively scant attention given to the possible existence of structural breaks and the impact that such breaks may have on tests for market integration. Other research has shown that failure to take into account structural breaks in various macroeconomic data series may have yielded misleading results on cointegration (in particular, unit root tests on individual series). In this article we examine the issue of whether the stock market and real estate markets are stationary or nonstationary in the presence of structural breaks. We adopt the techniques of Perron (1989), Zivot and Andrews (1992), and Perron and Vogelsang (1992). Each of these tests is based on different assumptions and therefore may yield differing results. In general, the results do not support cointegration of domestic property and equity markets or cointegration of markets internationally.     

Monetary policy,government control and capital investment: Evidence from China

This study examines how the relationships between local governments and local enterprises moderate the effect of targeted monetary policies through different action-propagating mechanisms. First, we investigate the impact of monetary policies on enterprise investment in areas with different institutional environments. Second, we investigate the impact of monetary policies on state-owned enterprises (SOEs) with different property rights structures. Third, we examine how political connections can influence the action-propagating mechanism of monetary policies. We conclude that in China monetary policies have different effects on SOEs and on private enterprises with or without political connections. Specifically, local government interventions can significantly weaken and distort the effects of monetary policies, such that the intended reduction in investment is noticeably alleviated for SOEs and private enterprises with close links to local governments.