Do Insiders Manipulate Earnings When They Sell Their Shares in an Initial Public Offering?

In this article we examine whether insider share selling in an initial public offering (IPO) influences R&D expenditures. Insiders (managers and venture capitalists) who sell their pre‐offering shareholdings might try to increase the IPO offer price (1) by overinvesting in R&D to signal the firm's prospects (the signaling hypothesis) or (2) by underinvesting in R&D to increase current reported earnings (the earnings fixation hypothesis). We find that, for a sample of 243 IPOs from 1986 to 1990, change in R&D spending in the year of the IPO is negatively related to managerial selling. Because reductions in R&D spending increase current earnings at the expense of future earnings, our evidence suggests that managers believe that investors place more emphasis on current earnings and less emphasis on R&D and therefore spend less on R&D. We also document a positive association between discretionary current accruals in the offering year and managerial selling, suggesting that selling managers manipulate accruals as well.     

Do Initial Public Offering Firms Purchase Analyst Coverage with Underpricing?

We report that initial public offering (IPO) underpricing is positively related to analyst coverage by the lead underwriter and to the presence of an all‐star analyst on the research staff of the lead underwriter. These findings are robust to controls for other determinants of underpricing and to controls for the endogeneity of underpricing and analyst coverage. In addition, we find that the probability of switching underwriters between IPO and seasoned equity offering is negatively related to the unexpected amount of post‐IPO analyst coverage. These findings are consistent with the hypothesis that underpricing is, in part, compensation for expected post‐IPO analyst coverage from highly ranked analysts.     

案例:如何卖个好价钱

2000年10月21日,通用电气宣布收购霍尼韦尔国际公司.华尔街投资银行家分析,通过此次并购,通用电气将进一步巩固自己作为全球最大和盈利最高公司之一的地位.不过在这起收购行动中,赢家不只通用电气一个,霍尼韦尔的股东同样感到心满意足.因为最后的成交价足足比霍尼韦尔的心理价位高出几十亿美元.在这场收购谈判中,霍尼韦尔知己知彼,利用自身的技术优势与良好的市场前景,抓住通用电气和联合技术公司都想收购自己的心理,在竞购方之间眉来眼去,左右逢源,迫使两家公司不断抬高收购价格,最终致使通用愿意以高出竞争对手50亿美元的出价将自己买下,印证了那句"要卖也要卖个好价钱"的商界流行语.     

Decisions of Initial Public Offering Review Committees: Causes and Consequences

We investigate the causes and consequences of the decisions made by an initial public offering (IPO) reviewing committee using a unique data set from Taiwan. Firms that were approved for listing are associated with better financial performance measures and are larger in equity size. Whether the committee unanimously approves an IPO firm depends on whether the firm's associated auditor changes or gives a nonunqualified report. The voting outcome has a discernable effect in the sense that unanimously approved firms are associated with higher financial performance measures (returns on equity, returns on assets, earnings per share, and the price-to-earnings ratio) than are nonunanimously approved firms, with the differences being more significant in the two years after the IPO.     

Foreign Banks in Transition Countries: To Whom Do They Lend and How Are They Financed?

We use focused interviews with managers of foreign parent banks and their affiliates in Central Europe and the Baltic States to analyze the small‐business lending and internal capital markets of multinational financial institutions. Our approach allows us to complement the standard empirical literature, which has difficulty in analyzing important issues such as lending technologies and capital allocation. We find that the acquisition of local banks by foreign banks has not led to a persistent bias in these banks' credit supply toward large multinational corporations. Instead, increased competition and the improvement of subsidiaries' lending technologies have led foreign banks to gradually expand into the SME and retail markets. Second, it is demonstrated that local bank affiliates are strongly influenced by the capital allocation and credit steering mechanisms of the parent bank.     

Contagion: Understanding How It Spreads

Much of the current debate on reforming the international financialarchitecture is aimed at reducing the risks of contagion—bestdefined as a significant increase in cross-market linkages aftera shock to an individual country (or group of countries). Thisdefinition highlights the importance of other links throughwhich shocks are normally transmitted, including trade and finance.During times of crisis, the ways in which shocks are transmitteddo seem to differ, and these differences appear to be important.Empirical work has helped to identify the types of links andother macroeconomic conditions that can make a country vulnerableto contagion during crisis periods, although less is known aboutthe importance of microeconomic considerations and institutionalfactors in propagating shocks. Empirical research has helpedto identify those countries that are at risk of contagion aswell as some, albeit quite general, policy interventions thatcan reduce risks.      

Firm Value and the Choice of Offering Method in Initial Public Offerings

A firm raising capital in an initial public offering faces the problems of choosing between a firm-commitment and a best-efforts offering and of how to convey information about its value to potential investors. The offering method chosen affects both the firm's cost of obtaining capital and investors' perceptions about firm value. A partially pooling, partially separating equilibrium is found where high-valued firms have information about their values revealed in a firm-commitment offering, while low-valued firms use best-efforts offerings and are unable to distinguish themselves from other firms.     

浅析我国近期IPO市场发行抑价之成因及对策分析

IPO抑价是各国在新股发行时所普遍存在的现象。合理的IPO抑价是股票发行人与主承销商所应当给与投资者的合理回报,但是过高的抑价倍数将可能伤害到部分投资者的认购积极性及本次发行的融资效率。在我国,IPO抑价问题较为突出,因此,应当结合我国特殊情况进行针对性的分析,在巩固前期新股发行制度改革的基础上,进一步从估值技术、市场化定价、扩大新股供应量等多方面进行完善。     

Initial Public Offering Underpricing: The Issuer's View—A Comment

I consider the underpricing of initial public offerings (IPOs) and the wealth transfers implicit in that underpricing. I find that initial returns properly measure the “issue cost” effect of underpricing as a fraction of offer size, as in Ritter (1987) . I present a measure of the wealth effect of underpricing per share retained. In general, the wealth effects on existing shareholders depend on the extent to which they participate in the offering. From the perspective of issuer's wealth, I find that Dawson's (1987) measure is appropriate only in the special case in which all of the prior owners'; shares are sold in the IPO.     

The Nature and Persistence of Initial Public Offering Aftermarket Returns Predictability

This paper examines the predictability of monthly aftermarket returns of initial public offerings during the first six years of trading. Predictability is tested under the null hypothesis of random walk using a Markov chain analysis. The evidence shows that excess returns of IPOs (adjusted for the return on the equally weighted NASDAQ index) demonstrate non-random walk behavior through the first five years of trading and random walk behavior in the sixth year. This is accompanied by predictability of monthly excess returns conditioned on the two previous months' excess returns. A trading strategy is offered to capitalize on the predictability patterns. Implementing the trading strategy is not possible due to institutional barriers, providing additional explanation for why IPOs do not reach their intrinsic values for extended periods of time.     

Who Finances Durable Goods and Why It Matters: Captive Finance and the Coase Conjecture

We propose that, by financing their own product sales through captive finance subsidiaries, durable goods manufacturers commit to higher resale values for their products in future periods. Using data on captive financing by the manufacturers of heavy equipment, we find that captive‐backed models have lower price depreciation. The evidence is consistent with captive finance helping manufacturers commit to ex‐post actions that support used machine prices. This, in turn, conveys higher pledgeability for captive‐backed products, even for individual machines financed by banks. Although motivated as a rent‐seeking device, captive financing generates positive spillovers by relaxing credit constraints.     

Risk Culture: What It Is and How It Affects an Insurer's Risk Management

This article conceptualizes risk culture and sheds light on the role it plays in insurers’ risk management frameworks. The article follows a cognitive, dynamic approach, arguing that risk culture is the product of organizational learning about what has or has not worked for it in the past. Within their local context, the members of a group learn which of the typically centrally prescribed formal risk management policies and procedures and which espoused risk philosophies actually work in practice in the sense of behavior that is formally or informally encouraged or discouraged, rewarded or punished. While the formal risk management framework defines which processes to use, which limits to obey, and which values to aspire to, it is the risk culture that defines which rules and norms are perceived to be rational and important. The insurance literature commonly argues, and practice suggests, that it is necessary to achieve consistency in order to effectively embed risk management. Nevertheless, inconsistent basic assumptions at the deepest level of risk culture are a likely feature of local subgroups. However, what is rational and efficient to one subgroup might be random and dangerous for the organization as a whole.     

德隆摔倒在"做大"的道路上

做大还是做强．这个类似莎翁“TOBEORNOTT0BE”的问题一直以来困扰着中国的企业家。人们习惯于将做大等同于多元化经营．将做强等同于专业化运作。二者之间应该如何选择呢？记者曾于去年就此问题与香港中文大学的郎成平教授探讨过。随后他那“做强是根本．做大乃误区”的论断便激起了业内的反复讨论。当好事者批评他是“理论上的正确．实践上的失败”时．高调进行多元经营的知名民企德隆却重重地摔倒在“做大”的道路上。究竟应该如何透过企业实践来理解做大做强呢？“做大做强”是否给中国经济带来其他顽症了呢？记者再次采访郎咸平教授。     

QFII:如何趋利避害--和合规运作

为了发挥合格境外机构投资者的作用,最近我国有关主管部门制定了有关QFII规章.     

Predicting Subsequent Management Forecasting Behavior at the Date of an Initial Public Offering

In this study, we examine the conditions and choices of firms at dates of initial public offerings (IPOs) as a basis for predicting their likelihood of management earnings forecast disclosure in post-IPO periods. Using a sample of 944 IPOs, we demonstrate that firms choosing to reduce IPO information asymmetries or signal issue quality by choosing prestigious underwriters, high quality auditors, and higher percentages of retained ownership tend to issue management forecasts in the post-IPO period. These relationships exist after controlling for IPO date measures of risk/stability, a construct that prior management forecast research has found to be a key determinant of the forecasting act.     

Early Education and Children's Outcomes: How Long Do the Impacts Last?*

We evaluate the effects of undergoing any early education (before the compulsory starting age of 5) and of pre‐school on a cohort of British children born in 1958. In contrast to most available studies, we are able to assess whether any effects on cognition and socialisation are long‐lasting, as well as to estimate their net impact on subsequent educational attainment and labour market performance. Controlling for a particularly rich set of child, parental, family and neighbourhood characteristics, we find some positive and long‐lasting effects from early education. Specifically, pre‐compulsory education (preschool or school entry prior to age 5) was found to yield large improvements in cognitive tests at age 7, which, though diminished in size, remained significant throughout the schooling years, up to age 16. By contrast, attendance of pre‐school (nursery or playgroup) was found to yield a positive but short‐lived impact on test scores. The effects on socialisation appear to be more mixed: we found some positive, though short‐lasting, effects of pre‐compulsory education on teachers' reports of social adjustment (only at age 7); on the other hand, we found some adverse behavioural effects according to parental reports at age 7 which persisted up to age 11. In adulthood, pre‐compulsory education was found to increase the probabilities of obtaining qualifications and of being employed at age 33. For both pre‐compulsory education and pre‐school per se, we found evidence of a marginally significant 3–4 per cent wage gain at age 33.