Public media and previous research have focused mainly on listing day returns of initial public offers (IPOs) by new economy companies in specific periods such as before April 2000, without examining any subsequent equity offers by new economy companies. This study addresses the issue of multiple equity offers and provides additional understanding of new economy initial and seasoned equity offers (SEOs). Without, a priori, favouring any existing explanation of initial and long-term share returns, this research tests a wide range of theories in order to provide insight into share returns of equity offerings by new economy companies listed on the Australian Stock Exchange between 1994 and 2004. In general, this thesis documents the ability of publicly available information (obtained from offer documents and company announcements to the market) to explain the returns of equity-issuing new economy companies in Australia. In other words, how useful is public information in the valuation of initial and seasoned equity offers of new economy stocks? Specifically, the thesis seeks to examine the ability of public information to explain (a) listing day and long-term returns subsequent to initial public offers by new economy companies, and the probability of IPO withdrawal, (b) announcement period and long-term returns of seasoned equity offers by new economy companies, and (c) the relationships between the initial and any subsequent equity offers by new economy companies (within three years of listing) in terms of probability of seasoned equity offer, duration between the IPO and the first SEO, and frequency of seasoned equity offers within the first three years of IPO. First, the thesis finds that public information is used by investors to value new economy stocks on listing day and in the long run. The negative effect of withdrawal probability on listing day returns of successful IPOs is confirmed in this thesis in the context of the fixed-price offer process in the new economy sector in Australia. While new economy equity-issuing companies have inferior long-term returns compared to the market index and the small capitalisation stock index, they do not underperform relative to their respective industry index returns. Second, this study also finds that public information can explain new economy stock returns around the announcements of seasoned offers and in the long run. Third, the results reveal that publicly available information can be used to explain the incidence and to estimate the probability of seasoned equity offers by recent new economy IPOs. Furthermore, it is found that public information has the ability to explain the duration between the IPO and the first seasoned offer, as well as the frequency of seasoned offers in the first three years after listing. The results of the study support the theoretical predictions about the effects of public information (representing IPO characteristics) and the incidence of a seasoned equity offer. In particular, IPO quality signalling by retained ownership and by underpricing, and the market feedback effect of post-IPO returns have been confirmed for new economy equity offers in Australia. Underpriced new economy IPOs and those with greater proportion of ownership retained after the offer are significantly more likely to have a seasoned equity offer within three years of listing. Likewise, new economy IPOs with superior aftermarket returns are significantly more likely to have a seasoned equity offer. The implication of this research is that public information contained in offer documents and in company announcements is important to valuation of the Australian Stock Exchange listed new economy companies. Thus, the regulators and the Stock Exchange should continue to insist on a high level of information disclosure prior to equity offers in order to enable investors to properly value companies within the new economy sector.

One of the puzzles regarding IPO’s is that the issuers rarely get upset about leaving substantial amounts of money on the table due to underpricing. The cost of underpricing is the number of shares sold multiplied by the difference between the first-day closing price and the offer price. The research sample of IPOs and JSE databases comprised, respectively, 160 and 321 new applicants for the years 1995-1999. New applicants comprising the research sample raised R12.55 billion with an underpricing cost exceeding R2.85 billion i.e., 22.71 percent of the IPO capital raised. This cost was found to be nearly 10 times greater than the R295 million paid in fees to the corporate advisors by the issuing companies. The prime beneficiaries of this discount were a select grouping of private placement investors at the discretion of the corporate advisors and directors. Mean unadjusted initial first day returns amounted to 55.04 percent. Public Offer IPO’s (solely or as a component of a Hybrid Offer) follow UK influenced corporate legal systems– both in legislative norm and empirical results. First day initial returns were presented per issuer List Board, Method and Type of Listing, IPO capital raised and disclosed use of proceeds. Internationally many theories have been raised as to what has become to be known as the short-run underpricing puzzle. The winner’s curse hypothesis is directly tested flowing from and the unique data availability. It was shown that South African Public and Hybrid IPO Offer methods bear an exceptionally close correlation to UK influenced corporate legal systems and as such proved a reliable empirical testing ground for the winners curse phenomena using the same methodology and equations as their international counterparts hereunder. The UK based corporate law and institutional arrangements in South Africa allow a direct test of the empirical implications of the winner’s curse hypothesis in pricing unseasoned new issues.

This dissertation includes two chapters that investigate the role venture capitalists (VCs) play in the underpricing and in the long-run performance of IPOs. The first chapter focuses on the underpricing of IPOs and attempts to determine the role that VCs play in this underpricing process. The evidence is consistent with a view that VCs agree to underpricing to ascertain benefits from both "grandstanding" and "spinning." The second chapter examines the long-run performance of IPOs and tries to determine the role that VCs play in the development of IPOs. Here, the evidence suggests that VC-backed IPOs appear to have better access to capital than non-VC-backed IPOs, but the long-run performance of VC-backed IPOs is generally mixed.

Made available in DSpace on 2016-04-25T18:39:42Z (GMT). No. of bitstreams: 1 Camila Rocha Tafarello Securato.pdf: 4595294 bytes, checksum: 38e330e48c945f07be8b4d41b0cec9cf (MD5) Previous issue date: 2011-10-17 / Since the creation, in 2000, of Bovespa s Novo Mercado and its access levels, most existing shareholders in an Initial Public Offer (IPO) are subject to a lockup period in which they cannot sell their shares for a pre specified time immediately after the IPO (typically 180 days). This thesis investigate whether the shares of companies listed on the Bolsa de Valores de São Paulo (BM&FBovespa) present abnormal return due to the expiration of an IPO lockup, in the period from 2000 to 2010. By the method of event study, we examine 77 share lockup agreements that prevent existing shareholders from selling their shares. When lockups expire, we find a statistically prominent cumulative abnormal return around the event window when the firm in the sample is financed by private equities and also for the firms in the sample that operates in the infrastructure sector / Desde a criação do Novo Mercado da Bovespa e de seus níveis de acesso em 2000, a maioria das Ofertas Públicas Inicias de Ações passou a estabelecer acordos específicos de lockup que impedem os acionistas controladores e administradores das empresas emissoras de vender e/ou ofertar suas ações ou derivativos dessas ações por um período predeterminado imediatamente após a oferta (geralmente 180 dias). O objetivo desta dissertação foi investigar se as ações das companhias listadas na Bolsa de Valores de São Paulo (BM&FBovespa) apresentam retorno anormal em virtude do vencimento do período de lockup de um IPO, no período de 2000 a 2010. Pelo método do estudo de eventos, examinaram-¬‐se 77 acordos de lockup que vedam os acionistas existentes de vender suas ações. Ao vencimento dos lockups, verificou-¬‐se a existência de retornos anormais acumulados negativos estatisticamente significantes em torno da janela do evento para as empresas da amostra que tinham como acionistas fundos de private equity e também para as empresas da amostra que atuam no setor de infraestrutura