When a firm decides to go public, two abnormalities often occur. The first is called underpricing and can be defined as a capital loss made by the company the first day of trade due to that the offer price is lower than the closing price after the first day of trade. The increase in stock value is equal to capital the issuing firm could have gained initially; this capital loss is referred to as the “money left on the table”. The second abnormality, underperformance, is a result from underpricing. It means that the stocks that were underpriced the first day also tend to underperform 3-5 years after the initial public offering (IPO) compared to competitors within the same industry. These two abnormalities together constitutes a problem for the firm because they loose money. However it also enables investors to make a quick profit. There are many studies covering this area, however mostly made by Americans, therefore the aim of this report is to investigate whether the two abnormalities exist on the Swedish market. In order to fulfill the purpose, companies that were listed 1998-2007 were investigated. Their stock performance is analyzed both on the day of IPO, where we found that 51% of the companies listed were underpriced, with an average of 23%. Further, the average “money left on the table” per company was 3.9 MSEK. The stock prices have also been analyzed on a one- as well as a five year period after the IPO in order to analyze the long-run performance and later compare it to the rest of the industry as well as industry index. We found that most of the companies that where underpriced also tend to follow underperformance. However, how long they underperform depends in which industry they operate. The IT industry, for example had a negative performance after 5 years whereas the Industrials industry has the turning-point from negative performance before 5 years.

<p>When a firm decides to go public, two abnormalities often occur. The first is called underpricing and can be defined as a capital loss made by the company the first day of trade due to that the offer price is lower than the closing price after the first day of trade. The increase in stock value is equal to capital the issuing firm could have gained initially; this capital loss is referred to as the “money left on the table”. The second abnormality, underperformance, is a result from underpricing. It means that the stocks that were underpriced the first day also tend to underperform 3-5 years after the initial public offering (IPO) compared to competitors within the same industry.</p><p>These two abnormalities together constitutes a problem for the firm because they loose money. However it also enables investors to make a quick profit. There are many studies covering this area, however mostly made by Americans, therefore the aim of this report is to investigate whether the two abnormalities exist on the Swedish market.</p><p>In order to fulfill the purpose, companies that were listed 1998-2007 were investigated. Their stock performance is analyzed both on the day of IPO, where we found that 51% of the companies listed were underpriced, with an average of 23%. Further, the average “money left on the table” per company was 3.9 MSEK. The stock prices have also been analyzed on a one- as well as a five year period after the IPO in order to analyze the long-run performance and later compare it to the rest of the industry as well as industry index. We found that most of the companies that where underpriced also tend to follow underperformance. However, how long they underperform depends in which industry they operate. The IT industry, for example had a negative performance after 5 years whereas the Industrials industry has the turning-point from negative performance before 5 years.</p>

The number of US domiciled initial public offerings (IPOs) has declined since its peak listing year in 1996. The US listing gap has grasped the attention of experts and researchers in the field but there is a lack of agreement among intellectuals regarding the underlying causes. The purpose of this paper is two-fold: 1) to identify and analyze the company characteristics and underlying factors that impact age at time of IPO that has resulted in the US listing gap and 2) to test if these characteristics and factors have fluctuated in impacting company age at IPO over time.

Initial public offerings (IPOs) are primarily valued using the comparable firms approach, whereby underwriters rely heavily on multiples based on the accounting information of peer firms. Effective use of the comparable firms approach depends significantly on the underwriter's ability to estimate the expected future growth and profitability of the IPO firm and its peers and make appropriate adjustments to the multiples to arrive at a final offer price for the IPO shares. I find evidence that, in general, IPO valuations are decreasing relative to peers in the similarity of the peer group to the IPO firm, but this effect is moderated by the peer group's accruals quality. These findings suggest that when peers are similar to the IPO firm, underwriters make less adjustments to the final offer price, however, higher peer accruals quality may ease the assessment of differences in growth and profitability, facilitating further adjustments.

The thesis aims to apply the theoretical approach of IPOs and financial services firm valuation on the Czech subsidiary of KBC: ČSOB. The theoretical part reviews the process of IPO with typical features of IPOs, and the pricing of IPO is discussed with the focus on theory of banks valuation. The empirical part of the thesis provides a financial analysis of the ČSOB, business plan and the valuation of the bank as of 30 September 2010 with the price of the actual IPO. This part aims at practical application of the theory of IPO and valuation. Al in all, the aim of the thesis is to apply theoretical knowledge of the IPOs on the practical case of ČSOB. Various analyses such as of KBC, ČSOB, Czech banking market, development of IPOs in CEE are used in order to apply and determine the reasons for the IPO, its timing, price and potential structure of investors.

In the first essay, I show that the transition to public equity markets have important implications to firms’ innovative process. To establish a causal effect of the IPO, I compare the long-run innovation of firms that completed their filing and went public with that of firms that withdrew their filing and remained private. I use NASDAQ fluctuations during the book-building period as a source of exogenous variation that affects IPO completion but is unlikely to affect long-run innovation. Using this approach, I find that the quality of internal innovation declines by 50 percent relative to firms that remained private. The decline in innovation is driven by both an exodus of skilled inventors and a decline in productivity among remaining inventors. However, going public allows firms to attract new human capital and purchase externally generated innovations through mergers and acquisitions. In the second essay, we explore the effects of private equity investments on the industries they invest at. This analysis looks across nations and industries to assess the impact of private equity on industry performance. Industries where PE funds have invested in the past five years have grown more quickly in terms of productivity and employment. It is hard to find support for claims that economic activity in industries with private equity backing is more exposed to aggregate shocks. The results using lagged private equity investments suggest that the results are not driven by reverse causality. Finally, in the third essay we model situations in which a principal offers a set of contracts to a group of agents to participate in a project. Agents’ benefits from participation depend on the identity of other participating agents. We show that when assuming multilateral externalities, the optimal contracts’ payoff relies on a ranking of the agents, which can be described as arising from a tournament among the agents. Rather than simply ranking agents according to a measure of popularity, the optimal contracting scheme makes use of a more refined two-way comparison between the agents. We derive results on the principal’s revenue extraction and the role of the level of externalities’ asymmetry. / Economics

Made available in DSpace on 2016-03-15T19:32:21Z (GMT). No. of bitstreams: 1 Ligia Ferraci.pdf: 1333034 bytes, checksum: 7872150631d4eb40ece4b912f3149334 (MD5) Previous issue date: 2010-08-11 / Fundo Mackenzie de Pesquisa / The capital market in Brazil has experienced, especially from the year 2003 to 2009,several changes and significant growth due to the global economic and financial environment as well as internal factors highlighting the regulatory improvements, development and credibility. As a result of this growth, we have observed a large number of companies that became public especially from 2006 on. The stock price behavior during this period has showed significant short-term positive returns, even when compared to Ibovespa index rates (Sao Paulo s Stock Exchange).Some potential explanations for such events may be the stock issue below the correct price (underpricing), informational asymmetry, the winner's curse (Rock ,1986) or other market anomalies discussed in the financial theory. This research focused the study in two possible factors: (1) issue below the correct price, known in financial literature for underpricing, and (2) the risk and return function as explanatory for stock returns in IPO issued from 1st, 30.th, 60.th, 90.th and 180.th days considering the sample of companies which registered initial public offerings (IPO) from 2003 until December 2009 listed on the Bovespa and the Securities Commission (CVM) and which had daily close available prices. The objective for this study was to verify the existence of underpricing in the IPO process and whether the observed abnormal returns can be explained by the risk and return function. As for the conclusion, in line with results of other recent researches for Brazilian stock market, were observed positive returns in the short term and negative returns for long term concluding that underpricing is a practice adopted in IPO s in Brazil as well as in other developed capital markets. / O mercado de capitais no Brasil experimentou,especialmente entre os anos de 2003 a 2009,muitas mudanças e crescimento acentuado em razão do ambiente econômico-financeiro mundial, bem como de fatores internos de ordem regulatória que propiciaram seu amadurecimento, desenvolvimento e credibilidade.Como consequência deste crescimento,observou-se um grande número de empresas que abriram seu capital mais acentuadamente a partir do ano de 2006.O retorno das ações durante esta periodo mostrou valores significativos a curto prazo, mesmo se comparados aos índices médios de mercado da Bolsa de Valores de São Paulo-Bovespa. Algumas explicações possíveis para tais eventos podem ser o lançamento abaixo do preço correto (underpricing), assimetria informacional, maldição do vencedor (winner s curse), anomalias de mercado, etc. Esta pesquisa centralizou o foco de estudo em dois possíveis fatores: (1) lançamento abaixo do preço correto, denominado na literatura financeira de underpricing, e (2) a relação entre risco e retorno como explicativa para retornos das ações lançadas em IPO a partir do 1.º, 30.º, 60.º, 90.º e 180.º dias da emissão considerando a amostra das empresas que registraram ofertas iniciais (IPO) a partir de 2003 até dezembro de 2009 listadas na Bovespa e na Comissão de Valores Mobiliários (CVM) que possuíam cotações diárias de fechamento disponíveis.O objetivo do trabalho foi verificar a existência underpricing no processo de abertura de capital e se os retornos anormais verificados podem ser explicados pela relação risco e retorno.A título de conclusão e em consonância com resultados de outras pesquisas recentes para o mercado brasileiro, foram encontrados retornos positivos no curto prazo e negativos no longo prazo concluindo-se que o underpricing é uma prática adotada nos processos de IPO no Brasil assim como ocorre em outros mercados de capitais desenvolvidos.

This study aims to further develop research, from a management approach, by studying how MCS packages change when an organization undergoes an initial public offering. Furthermore, it aims to use Malmi and Brown’s (2008) management control system package in order to categorize and analyze the complexity of organizational change brought on by an initial public offering. This study draws on interviews with top managers in a high technological firm, which has recently been listed on the stock exchange. The results of this study imply that an initial public offering can change the MCS package in a number of different ways. Public companies do not necessarily become short-term, an initial public offering can affect a company’s external focus and measurements without affecting its internal measurements, in order for companies to become suitable for the stock market they formalize policies and appoint an independent board and listed companies can experience changes to their culture.

[pt] A Oferta Publica Inicial de Ações (IPO) tem sido objeto de estudo em diversos países, em função da importância destas operações, principalmente em mercados desenvolvidos. Especialmente no Brasil, este ainda é um assunto relativamente novo, com crescimento no volume de operações nos últimos anos. Este trabalho busca avaliar as operações através da metodologia de Múltiplos, verificando se as empresas foram superavaliadas, ou tiveram seu valor subestimado. Em seguida, foi estimado o custo de capital próprio das empresas, com base nas informações disponíveis no momento da operação e comparado ao retorno observado após o lançamento. Da mesma forma, foi estimado o beta, com base na média de cada setor e comparado ao realizado nos meses seguintes, buscando testar a assertividade das estimativas utilizadas para o cálculo do Custo de Capital. O presente trabalho teve como ponto de partida o estudo realizado por Felipe Casotti (2007), analisando as operações entre 2004 e 2006, tendo agora uma amostra maior e um histórico mais longo de dados, possibilitando análises mais robustas e resultados mais conclusivos. É possível constatar que as precificações das emissões não foram superestimadas, pois apesar das altas valorizações no curto prazo, os retornos de longo prazo ficaram abaixo do médio do mercado e em linha com o Custo de Capital estimado. / [en] Initial Public Offerings (IPO) have been the subject of studies in many countries due to its importance, mainly in developed markets. Especially in Brazil, it is still a new topic, as the number of operations has grown over the last years. This research intends to evaluate these operations, using the Relative Valuation Methodology, to verify if the companies were overpriced or underpriced. Following that, the Cost of Equity for these companies was estimated, based on the information available at the time of the offer and then compared to the return observed after the shares issue. Besides that, the beta was estimated based on the average for each industry, and then compared to the actual observed on the following months, aiming at testing the accuracy of the estimate used in the Cost of Capital calculation. This research was based on a previous study, undertaken by Felipe Casotti (2007), which analyzed the operations between 2004 and 2006, with the added benefit of now having a larger sample and a longer record of actual data, enabling more robust analyses and more conclusive results. It is possible to observe that the price of IPOs were not overestimated, as despite the high upsides in the short term, the returns in the long run performed below market average and were very close to the estimated Cost of Capital.

[pt] A precificação das ações emitidas em ofertas públicas iniciais tem sido alvo de estudos em diversos países. Abordando o conceito de avaliação por múltiplos, este trabalho busca verificar se as ações das empresas estavam sub-avaliadas ou super-avaliadas no momento das suas Ofertas Públicas Iniciais (Initial Public Offerings). Posteriormente, são determinados os custos de capital próprio adotados na emissão, verificando-se a diferença entre betas utilizados no modelo CAPM, no momento da IPO, e os betas dos 12 meses após a oferta inicial. Para tal, foi utilizada uma amostra composta por empresas que abriram capital entre 2004 e 2006. Observou-se que as ações não foram sub- avaliadas, mesmo após serem observados elevados retornos iniciais. No entanto, não há evidências estatísticas de que foram super-avaliadas. Por fim, verificou-se que os betas de 12 meses são significativamente maiores do que os betas utilizados no momento da precificação. Como esperado, o modelo CAPM determinou retornos abaixo dos retornos ocorridos após a emissão. / [en] The pricing of assets issued in initial public offerings has been the subject of many studies in several countries. Using the concept of relative valuation, this study intends to verify if the shares of selected companies were undervalued or not at the time of their IPOs (Initial Public Offering). Later, the cost of equity is determined and betas used in the CAPM model, at the time of the IPO, and the betas verified 12 months after the initial issue are compared. The sample is composed of companies with IPOs during the period 2004-2006. The results show that the shares were undervalued, although high initial returns were observed. However, there is no statistical evidence that they are overvalued. Finally, it was found that the betas after 12 months are significantly higher than the ones used at the time of the pricing. As expected, the CAPM model determined returns below the returns that occurred.