Changing underwriting practices on underpricing of U.S. global initial public offerings

We examine the underpricing of U.S. firms that went public globally (Global IPOs) between 1986 and 2003. Our results suggest that, when compared to their peers that went public at home, U.S. issuers did not enjoy an advantage in issue costs from their global offerings. Their offers experienced substantial increases in underpricing, which exceeded that of their peers since the late nineties. We observe that the increased underpricing was accompanied by an overwhelming proportion of Global IPOs being underwritten by prestigious underwriters and backed by venture capitalists. In addition, Global IPOs accounted for an increasing percentage of total issues of U.S. firms in the late nineties. Further findings suggest that Global IPOs may be motivated by expanding investor demand under favorable overseas market conditions and increasing visibility through global placement.     

Price limits,investor sentiment,and initial public offering underpricing: A quasi-natural experiment based on ChiNext

Based on the data on initial public offerings (IPOs) listed on Growth Enterprises Market (ChiNext) in 2009–2018, this paper examines the impact of first-day listing price limits on IPO underpricing by adopting the event study and regression discontinuity design models. Our research indicates that the implementation of price limits significantly increases IPO underpricing by intensifying investor sentiment and encouraging market speculation. We also find that price limits have different impacts on companies with different characteristics such as innovation capacity and ownership structure. Our research may suggest how to improve the effectiveness of regulatory policy as well as current ChiNext and IPO market reforms.     

A comparison of Japanese and U.S. firms completing initial public offerings

We set out to examine firms breaking into the top tier of for-profit companies in the U.S. and Japan to find differences across the two groups. To accomplish this, we conducted a questionnaire survey of companies that had recently undergone an initial public offering (IPO) in each country and compared them on characteristics frequently associated with new firms.As we expected, even when the different sizes of the two economies were taken into account, there were considerably fewer listings in Japan than in the U.S. One reason for this is that the listing requirements for young Japanese firms, although not stricter, are much more strictly enforced. Hence, fewer Japanese firms are able to list.Our results show that the Japanese firms were markedly different from their U.S. counterparts on several characteristics. They tended to be older and larger, which is consistent with more stringent listing requirements in Japan. They were also much more often led by their original founders. This is a surprising result given that the Japanese firms, being older, had longer to lose their founders. When a successor to the founder was president, it was much more often a relative of the founder than in the U.S. The Japanese founders rated themselves higher on relatively emotional characteristics, such as aggressiveness, paternalism, and charisma than did either the U.S. presidents or the Japanese nonfounder presidents.The Japanese firms relied solely on the president for decision-making prior to the IPO more often than the U.S. firms did. However, the Japanese firms also moved in greater numbers to group decision-making around the time of the IPO.The post-IPO investment strategies of the Japanese firms were characterized by a focus on new product development, an increase in R&D spending, and investment in the company's capital plant. In contrast, the U.S. firms reported more interest in exploiting their existing market and buying other companies, usually leaving R&D spending at its pre-IPO level.Overall, it is surprising that on many characteristics, the Japanese IPOs tended to fall more to the extreme associated with new companies than did the U.S. firms. They were dominated by founder influence, the founders were apparently highly emotional, their management style was initially autocratic, and their strategies targeted innovation and internal development as avenues to growth. This pattern is consistent with a prior hypothesis that the lack of structural support for new firms in Japan results in only the most extreme personalities pursuing and succeeding in company formation.For researchers, a significant implication of this research is that Japanese ventures may not behave according to the same rules as U.S. ventures. Research samples that fail to distinguish nationality may obscure cross-regional variations.For practitioners, the major lesson is that a Japanese venture is likely to be much different from one in the U.S. Dealing with one is probably even more unlike dealing with an established company than working with a U.S. start-up might be.     

Firm value and its relation to equity retention levels, forecast earnings disclosures and underpricing in initial public offerings in Hong Kong

This study helps extend our understanding of the factors underlying the valuation of initial public offering (IPO) firms within the Hong Kong market context. The issues investigated are all the more important given Hong Kong's unique position in China, where free and unfettered capital markets entice global institutions wishing to partake in the ‘China investment story’. We find support for three signals of initial firm value: the fraction of equity retained by pre-listing stakeholders [Leland, H., & Pyle, D. (1977). Information asymmetries, financial structure and financial intermediation. Journal of Finance, 32, 371–387], the voluntary disclosure of a prospectus earnings forecast [Trueman, B. (1986). Why do managers voluntarily release earnings forecasts. Journal of Accounting and Economics, 53–71] and the amount of funds ‘given-up’ through IPO underpricing [see Allen, F., & Faulhaber, G. R. (1989). Signalling by underpricing in the IPO market. Journal of Financial Economics, 23, 303–323; Grinblatt, M., & Hwang, C. Y. (1989). Signalling and the pricing of new issues. Journal of Finance, 44, 393–420; Welch, I. (1989). Seasoned offerings, imitation costs, and the underpricing of initial public offerings. Journal of Finance, 44, 421–449]. Moreover, the signals appear robust to different firm valuation measures (i.e., market-to-book and Tobin's Q) and to the inclusion/exclusion of PRC state-owned H-share issuers.A number of other important contributions also emerge. First, we develop a new measurement form for the pre-listing shareholders’ equity retention level (α) by decomposing it to reflect differential effects from primary and (‘voluntary’ and ‘involuntary’) secondary offers. We further show that after accounting for listing rule effects—which partially drive the choice of the retained equity level in the Hong Kong setting—the equity retention-firm value relation is seen with much greater clarity.In a later stage of analysis we deepen the signal-firm value findings by relating the three signals to post-IPO earnings. We note a positive association between the fraction of equity retained by pre-listing owners and earnings growth. However, this association weakens somewhat beyond the first two accounting year-ends post-listing. Significantly, earnings appreciation appears markedly weaker for issuers going to market with a secondary offer component within their overall IPO. Finally, consistent with Jain and Kini's [1994. The post-operating performance of IPO firms. Journal of Finance, 49(5), 1699–1726] US evidence, IPO underpricing appears to have little or no association with post-listing earnings.     

Strategic behavior of insiders in initial underpricing and long-run underperformance

We study strategic behavior of insiders in ChiNext IPOs. Since traditional initial underpricing is not appropriate due to the jawbone P/E ratio approach and maximum initial return cap we propose two alternative measures. We identify a significantly positive relationship between insiders' shareholdings and initial underpricing. With no discretion on IPO offer price, the insiders implement earnings management to maintain higher stock prices induced by regulatory changes and high market demand and to facilitate selling their unlocked shares after lockup expiration. We confirm a negative impact from insiders' share sales on long-term performance but don't observe a dramatic underperformance as documented.     

The aftermarket performance of small firm initial public offerings

The dream of many entrepreneurs is to some day take his or her growing small firm public and, to thereby become the CEO of a publicly-traded corporation. Currently, entrepreneurs are continuing to utilize initial public offerings (IPOs), as a viable source of venture financing. IPOs also represent a viable mechanism for harvesting venture capital and entrepreneurial investments. The touted entrepreneurial benefits of taking a company public include the abilities to borrow additional funds; return to the public equity market; negotiate mergers without depleting cash; the potential for enhanced personal wealth and so forth. Investors in small firm public equity issues are often motivated by the potential for discovering another Apple Computer, or perhaps an IBM at the “ground floor.”This study empirically examines the aftermarket returns of small publicly-held firms that have issued initial public offerings. Aftermarket returns refers to stock returns immediately after a stock begins trading. The study specifically examines two questions. First, “Is there a positive risk-return relationship for small firm aftermarket returns, where higher firm risk will generate higher aftermarket return?” Second, “Will aftermarket returns show on industry effect, where certain industries will automatically generate higher returns?” Answers to these questions will affect the strategic financial alternatives available to entrepreneurs both before and after going public and, will also affect the decisions of investors interested in financing small public corporations.The research findings indicate that entrepreneurs planning to take younger firms public will probably not have available to them numerous subsequent financial alternatives, utilizing corporate stock, if the true aftermarket performance of their stock is taken into consideration. Likewise, investors in small firm public issues may also be disappointed in the aftermarket performance of younger firms. A positive risk-return relationship, where age was a proxy measure of risk, did not exist. This was true even though the initially quoted returns of these same younger firms may have been substantial. On the other hand, the aftermarket performance of older firms is typically favorable.Finally, the study suggests that neither entrepreneurs nor investors should bet solely on a particular industry categorization to “carry” their aftermarket stock performance. While certain industries indicated significant positive initial returns, aftermarket returns based on industry classification were generally not statistically significant. Investors should therefore always exercise firmspecific due diligence and research before investing in small firm public equity issues, since the variance of their aftermarket market returns tends to be large.     

Directors' ownership and the performance of small and medium sized firms in the U.K.

The primary purpose of this paper is to examine the relationship between firm performance and the proportion of shares owned by directors for a sample of small and medium sized companies in the U.K. The paper also examines, however, the impact of organisational form on firm performance. The results suggest that, in contrast to the majority of large firm studies on the subject, a curvilinear relationship is found to exist between firm performance and the percentage of equity held by the board of directors. The return on assets of firms is found to increase as director ownership increases up to a maximum at 68.2% of ownership, after which it then decreases as director ownership approaches 100% of equity. In addition, the results suggest that firms whose directors are more highly remunerated and who hold directorships in other companies are significantly more profitable. Furthermore, firms in which the owners perceive present management practices to be lacking in structure are found to have significantly lower performance.     

The maturity effect,rates of return and the course of U.S. foreign investment

The article addresses the question of whether the downtrend in reported rates of return to U.S. direct investment in Europe, which brought them to approximate equality with U.S. rates about 1970, was authentic or the reflection of bias created by increasing ‘immaturity’ due to the acceleration of the outflow. The answer is relevant to interpretation of the restraint program and its aftermath. Exploiting newly available age distribution data on multinational corporations, the article formulates two approximations to the maturity effect. Although both reflect the imperfect suitability of the data, it is probable that they span the possible range. The result: maturity effects accounted for only a small fraction of the observed downtrend.     

Marketing strategies,financial structure,and innovation in U.K. retailing

This study examines the pattern by which retailers have adapted to recent changes in consumer markets. Information was obtained on the marketing strategies and financial structures of 88 of the leading U.K. retailers. The first section identifies the key environmental developments of the later 1970's and appraises their impact on retailers. In the second section, the methods by which retailers have sought to adapt to these changes are outlined. Finally, a model is developed which distinguishes successful from unsuccessful retailing strategies and provides a methodology for evaluating alternative approaches to market positioning.     

Housing wealth,business creation and dissolution,in the U.K. regions

A number of recent studies have suggested that access to collateral in the form of housing assets may be an important factor in the process of new firm formation. In particular, it has been suggested that variations in housing wealth may be able to account for a substantial proportion of the variation in rates of business creation within and between the U.K. regions. Re-examining this issue, the paper finds that once appropriate allowance is made for the presence of dynamics in the formation process, the evidence for a positive relationship between housing wealth and regional rates of new business creation disappears. However, there is evidence in favour of the proposition that access to external collateral in this form may help established firms to stay in business.I am grateful to David Keeble and Peter Johnson for their helpful and timely comments. The usual disclaimer applies.     

Social inequalities in injury risk in Wales,U.K.

Road traffic accident data in Nigeria generally lack exact coordinate information. Accident analysis is, therefore, restricted to aggregate data on trends, magnitude and temporal dimensions. This article addresses the road accident problem in Jos between 1995 and 1999 through a road profiling approach. Results show that four gateway routes, seven multilane roadways (including two gateway routes) and seven road intersections accounted for 84% of all traffic accidents, 84% of injured casualties and 88% of fatalities. This approach allows for quantification of impacts of controlling for accidents by deliberate profiling of roads for close monitoring and policing. For example, reducing accident counts and fatalities by 50% each on gateway routes will amount to ～35 and 40% reduction in accident and fatality counts, respectively. Countermeasures must consider these roadways and intersections as important inputs in their accidents and casualty reduction targets.     

Socio-economic analysis of U.K. home accidents

Abstract

Drowning is the third commonest cause of accidental death of children in the UK and many children drown in domestic swimming pools. Concern has been raised about the design and safety of the covers used on domestic swimming pools since the majority of drowning and near-drowning incidents occur in pools with covers on. Swimming pool covers are a diverse range of products and fulfil a number of functions. This diversity in their design and the associated hazards necessitated a multidisciplinary approach to their evaluation. A study of the epidemiology of drownings was carried out in order to specify the risks of swimming pool covers, together with a study of the market and a survey of pool owners and their attitudes to safety. The risks of swimming pool covers were then evaluated by engineering, materials and ergonomics testing which included simulation of both the user and the products. This study is an example of the need for a mix of test methods and types of simulations in order to provide an overall statement of the safety of some consumer products. Results showed that the floating, heat retaining covers used on the majority of UK domestic pools possibly add to the intrinsic risks of a swimming pool. Winter debris covers, although appearing to seal the pool and considered by the majority of owners to make pools safer, were shown to allow children relatively easy access under the cover.     

Information and Noise in U.K. Futures Markets

This paper examines the extent to which futures price changes are driven by noise and information for three U.K. futures contracts by utilizing T. Andersen's (1996) specification of the mixture of distributions hypothesis. Use of the generalized method of moments approach demonstrates that the link between futures volume and volatility can be attributed to the flow of information. More importantly, it is shown that price movements are dominated by informed rather than noise trading for the FTSE‐100, the Long Gilt, and the Brent Oil futures contracts. The results suggest that further regulation based on the notion that noise traders dominate futures trading is unwarranted. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:711–731, 2004     

United Airlines Connects China and U.S. Capitals United now offers five daily nonstop flights from China to the U.S.

Following months of intense competition,United Airlines [NASDAQ:UAUA],the largest transpacific passenger carrier,connected for the first time ever the capitals of Washington,D.C.,and Beijing when its flight touched down at Beijing Capital International Airport at 14:20 on March 29.The service enables Washington.D.C.,to join 28 other world capitals in offering nonstop service to Beijing.     

Attitudes to privatization of UK public utilities: Anticipating industrial practice and environmental effects

Attitudes toward the impending privatization of the UK electricity supply and water industries were assessed by means of a questionnaire distributed to 225 visitors to holiday beaches in SW England as part of a broader survey of perceptions of coastal pollution. The water industry was evaluated more negatively than the electricity industry in terms of both its present performance and the changes in its practice anticipated after privatization. The levels of pollutants in the immediate environment were expected to increase, with those individuals most opposed to privatization being especially pessimistic. The results suggest that respondents did not consider privatization to be a corrective for poor previous industrial practice, but rather that it would lead to improvement where an industry was seen as performing well, and deterioration where it was seen as performing badly. At worst, this was seen as likely to involve the privatized industries putting their own financial interests ahead of those of the public and the environment. It is argued that individuals based their attitudes on previous experience and on assumptions about the effects of market forces on behaviour that differed from those implicit in the policy of privatization.

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Einstellungen gegenüber der Privatisierung von öffentlichen Strom- und Wasserlieferanten: erwartetes unternehmerisches Verhalten und erwartete Umweltwirkungen

Zusammenfassung Als in Grossbritannien die Privatisierung der öffentlichen Strom- und Wasserversorger bevorstand, wurde die Einstellung zu diesem Vorgang im Rahmen einer umfassenderen Umfrage zur Wahrnehmung der Küstenverschmutzung anhand eines Fragebogens erhoben, der an 225 Gästen an südenglischen Ferienstränden ausgegeben wurde.Bei einem Vergleich wurden die Wasserversorger weniger gut als die Stromversorger bewertet, und zwar sowohl hinsichtlich ihres gegenwärtigen Leistungsniveaus als auch hinsichtlich der Veränderungen, die als Folge der Privatisierung vermutet wurden. Es wurde erwartet, dass die Schadstoffemission in der unmittelbaren Umbebung zunehmen würde, wobei die Befragten mit der stärksten Vorbehalte gegen die Privatisierung in dieser Hinsicht besonders pessimistischen waren.Nach den Befunden betrachten die Befragten die Privatisierung weniger als Korrektiv bisherigen mangelhaften unternehmerischen Verhaltens als vielmehr als Anlass für eine scherenförmige Entwicklung, nach der bislang schon gut bewertete Anbieter noch besser werden, wogegen bislang schlecht bewertete noch schlechter werden. Schlimmstenfalls wurde angenommen, dass die privatisierten Unternehmen ihre eigenen finanziellen Interessen über allgemeine und Umweltinteressen stellen würden. Dere Beitrag folgert, dass die Befragten ihre Einstellungen auf bisherige Erfahrungen gründeten und auf Annahmen über die Verhaltenswirkungen der Marktkräfte, die von den entsprechenden Annahmen der Privatisierungspolitik abweichen.

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J. Richard Eiser is Professor of Psychology, Steven D. Reicher is Senior Lecturer in Psychology and Tessa J. Podpadec is Research Fellow in the Department of Psychology, University of Exeter, Exeter EX4 4QG, UK.This research was supported by a grant from the Economic and Social Research Council, UK, Ref. no. WL104251006.     

The Internationalization Process of Online SMEs in the U.K., U.S. and Australia

ABSTRACT

Starting from a modified version of the Cavusgil and Zou (1994) Cavusgil, S.T. and Zou, S. 1994. Marketing strategy-performance relationship: An investigation of the empirical link in export market ventures. Journal of Marketing, 58(1): 1–21. [Crossref], [Web of Science ®] , [Google Scholar] theoretical framework, in which the level of internationalization of online Small and Medium Enterprises (SMEs) is considered as an aggregated indicator of the export marketing strategy and a measurement of export performance, this paper investigates the influence of a series of internal and external factors on the internationalization of online SMEs. It expands the empirical framework used by Luo et al. (2005) Luo, Y., Zhao, J.H. and Du, J. 2005. The internationalization speed of e-commerce companies: An empirical analysis. International Marketing Review, 22(6): 693–709. [Crossref], [Web of Science ®] , [Google Scholar] in an attempt to explain the internationalization of online SMEs by integrating both organizational and market factors, thus improving the explanatory power of internationalization models, and enhancing their applicability for professionals.     

The difference in microwave oven ownership and use in London,U.K. and Atlanta,Georgia

In the present study of microwave oven ownership and use, three hypotheses were tested with data from 100 households in London, U.K. and 100 households in Atlanta, Georgia. The data were collected with a survey instrument administered by door-to-door interviews. The results of the study show that microwave owners are younger, have higher incomes, Larger families, and are more innovative than non-owners. The study also revealed that country of residence made a great difference in level of use. Households from Atlanta, Georgia, are younger, have larger families, have microwaves with many more features, and have owned a microwave longer than low level microwave users. The research reinforces the need for cross-cultural studies of this type.     

Ethnic entrepreneurship,initial financing,and business performance in China

Small Business Economics - Access to external financing is a major obstacle for starting a new business across various country contexts. Ethnic minorities, in particular, tend to face more extreme...