The path-to-profitability of Internet IPO firms

Extant empirical evidence indicates that the proportion of firms going public prior to achieving profitability has been increasing over time. This phenomenon is largely driven by an increase in the proportion of technology firms going public. Since there is considerable uncertainty regarding the long-term economic viability of these firms at the time of going public, identifying factors that influence their ability to attain key post-IPO milestones such as achieving profitability represents an important area of research. We employ a theoretical framework built around agency and signaling considerations to identify factors that influence the probability and timing of post-IPO profitability of Internet IPO firms. We estimate Cox Proportional Hazards models to test whether factors identified by our theoretical framework significantly impact the probability of post-IPO profitability as a function of time. We find that the probability of post-IPO profitability increases with pre-IPO investor demand and change in ownership at the IPO of the top officers and directors. On the other hand, the probability of post-IPO profitability decreases with the venture capital participation, proportion of outsiders on the board, and pre-market valuation uncertainty.     

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.     

Role of the intellectuals in governance

Environmental degradation and lack of social cohesion are rooted in bad governance, which, in turn is rooted in the inability of the modern civilization to understand the nature of differences in human psychology and their relationship with governance. The key to good governance in future will lie in invigorating such individuals to ‘speak’ who have transcended their desires of money and power and are able to take a dispassionate view of the problems in the larger social good. Multiple networks of persons who speak the truth have to be formed for this purpose.     

Reforming Food Subsidy Schemes: Estimating the Gains from Self-targeting in India

The paper uses the theoretical framework of the theory of tax reform to analyze whether a “small” change in an existing food subsidy program can be both welfare‐improving and revenue‐neutral. It shows how existing econometric methods can be adapted to estimate demand parameters even when household‐level data exhibit little price variation because the government controls food prices. The methodology is used to estimate welfare changes from shifting a rupee of subsidy on existing commodities to coarse cereals in the Indian public distribution system.     

Evaluating Efficiency of Personnel in Nepalese Commercial Banks

The failure of large and reputable banks is creating a potential threat to depositors’ hard-earned money deposited in commercial banks (CBs). Therefore, evaluation of the risk-adjusted efficiency of CBs is crucial. This study evaluates the relative efficiency of CBs personnel with an unbalanced panel dataset of 21 Nepalese CBs based on their remunerations, financial performances, and risky behaviors using data envelopment analysis, the Malmquist productivity index, and simple regression analysis. In the first step analysis, various financial ratios regarding the firm performance were considered. In the second step analysis, efficiency scores estimated in the first step analysis were adjusted by risk variables. The study shows that relatively large banks were exploiting personnel expenses, but smaller-sized banks, recently established banks, and banks with fewer branches gained more efficiency from their size. Personnel efficiency had a positive influence on the market price of stock, but it also increased the volatility of stock prices. Negative growth of both productivity indices (i.e., with and without risk adjustment) suggests poor agency services delivered by personnel and decreasing healthy conduct of Nepalese CBs.     

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.     

Ethics Trumps Culture? A Cross-National Study of Business Leader Responsibility for Downsizing and CSR Perceptions

Downsizing remains a topic of great interest to both academics and practitioners. Yet, the impact of layoff decisions on perceptions of corporate social responsibility (CSR) has hardly been studied. We examine the impact of responsibility of business leaders making these layoff decisions, and characteristics of the downsizing implementation on convergence and divergence in (1) CSR perceptions, (2) victims’ perceptions of fairness, and (3) survivor commitment, in four countries. Using an experimental design, sixteen scenarios were distributed to (1) 163 managers in Estonia, (2) 152 MBA students in India and 125 MBA students in France, and (3) 186 (non-traditional) undergraduate students in the USA. Results suggest that when top managers are attributed with the responsibility for downsizing, the resulting perceptions of CSR are negative. A similar pattern of results is obtained for victims’ perceptions of fairness and survivor commitment. In addition, although there are differences in effect-size based on differences in power distance, these results hold good (are similar) across the four countries, from four different society clusters. We discuss implications, limitations, and future research directions.