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>

This paper presents a seminal analysis of firms withdrawn from the IPO market (post security regulation filings) that return later for a subsequent IPO. This study contributes to the existing literature in four ways. First, by using IPO data from 1997 to 2012 in the Japanese market, the study extends the analysis on key determinants of a firm’s returning decision after an IPO withdrawal to the Japanese market. Secondly, it identifies VC ownership percentage and market run-up value 20 ~ 40 days prior to the withdrawn IPO as the key determinants of the probability a firm will return. Thirdly, using the duration model, the paper finds that an increase in VC ownership percentage and market run-up value 0 ~ 20 days prior to the withdrawn IPO allow the subsequent IPO to take place sooner. Finally, this paper attempts to find a correlation between macroeconomic indicators and the number of withdrawals at a given time. These findings can help find the factors that influence a firm’s decision in pursuing the public market option even after a failed attempt. However, censoring issues and the use of non-stationary variables remain as limitations to my findings.

I examine the determinants of cross-sectional liquidity in the IPO aftermarket during the period of 1995 through 2005. I find that past price performance, the extent of stock visibility, the mass of informed agents, and certain IPO attributes play a role in explaining IPO trading activity. My empirical evidence shows that differences of opinion and estimation uncertainty about an IPO firm affect little IPO liquidity. My findings contribute to the understanding of determinants of IPO aftermarket trading. I also investigate whether contemporaneous overreaction tends to occur following persistent information in the options market. More specifically, I compare the reactions between growth and value investors, and small and large investors conditional on past price reactions. My empirical results suggest that value investors react more strongly than growth investors following a series of prior information shocks, as measured by the cumulative level of overreaction. Small investors tend to react more strongly than large investors conditional on prior information shock, as measured by the cumulative sign or level of overreaction. The results imply that overreaction is a function of investor types and previous information and contribute to the overreaction hypothesis in the options market.

Univerzita Karlova v Praze Právnická fakulta Disertační práce Veřejná nabídka cenných papírů Public Offering of Securities Abstrakt v anglickém jazyce Červen 2011 Mgr. Jan Mikuláš Školitel: Prof. JUDr. Stanislava Černá, CSc. Abstrakt v anglickém jazyce Public offering of Securities Dissertation thesis focuses on public offering of securities according to the Czech Law, USA Law and German Law. The first part of the dissertation thesis describes the definition of securities and basic types of securities according to the Czech law. Subsequently, new types of securities like derivates are described in more detail. Following part of the dissertation thesis analyzes interpretation of the term "security" according to the USA Securities Act of 1933. This part of the dissertation thesis covers the most important case-law such as SEC versus W.J.Howey Co., SEC versus Koscot Interplanetary, Inc. or Landerth Timber Co. versus Landerth. The main part of the dissertation thesis is concerned with the legal regulation of the public offering of securities. Especially the definition of the public offering is more closely analyzed, while as the basis for the definition the German professional literature and commentaries regarding prospectus and public offering according to the German Law and EU Law were used. Further...

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 application of the internet technology on securities markets has been increasing over recent years, so is the influence it has caused on the way the stock market is operated. There is no doubt that internet technology is changing the access between investors and issuing firms, as well as the access between investors and exchanges. How would this affect the stock market microstructure? Little study has been done thus far in this regard, and, as far as we know, none has looked into the issue of IPOs on internet and its related impact on IPO returns. In addition to the impact on the primary market, internet tradings also have immense impact on the underlying performance of the secondary market. The purposes of this study are mainly twofold:(1) To explore the related issues in IPOs or DPOs on internet, e.g., the disclosure requirements, the restriction of investors, and the effect it has on IPO discounts,(2) To empirically test how the internet trading affects the daily and intraday performance (i.e., liquidity, volatility and efficiency) of the market.This is the first study attempting to examine the pricing issue of IPOs on the internet. We hope to compare the returns of initial public offerings on the internet with those of the traditional IPOs and analyze the differences, if any. In addition to provide useful analyses to the security authority on DPOs or IPOs on internet, the result of this study should contribute to our understanding of the market microstructure.

in English This thesis deals with process of public offering in Czech capital market's environment. Public offering is an alternative to debt financing for companies concerning raising capital. However, In Czech Republic, when companies confronted with this dilemma, waste majority of them choose debt financing against equity financing. My thesis is divided between introduction, eight chapters and conclusion. In the introduction of my thesis, I set to myself a goal, to answer the question, whether legislative situation in Czech Republic is negatively influencing the number of public offerings, mainly initial public offerings, carried out on Prague stock exchange. Every two chapter of my thesis creates one logical part and therefore I shall describe them as such. In first two chapters, I am enlightening the topic of public offerings and I also try to analyze reasons, which lead companies to undertake the whole process. My concern is also about factors, which company should pay attention to when deciding about going public. In third and fourth chapter I try to analyze the steps, which are necessary for companies to take before engaging in public offering process itself. I take extra care of prospectus, which is the most important document presenting the issuing security to investors. Main analysis...

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.