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Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Using an international sample of IPO firms and two country-level measures of financial literacy, we find strong evidence that financial literacy is negatively associated with IPO underpricing. In cross-sectional analyses, we find that the effect of financial literacy in reducing IPO underpricing is more pronounced when the information environment is less transparent. Employing path analysis, we document that information friction, firm transparency, and stock market participation are mechanisms that mediate this relationship. Our study contributes to and extends the literature by providing strong evidence that citizens' financial literacy has an important and consistent influence on IPO underpricing. [ABSTRACT FROM AUTHOR]

A short squeeze occurs if borrowed shares are recalled and the short seller is unable to find another source of shares. This forces the short seller to terminate a position early. For most stocks, the probability of a short squeeze is very low. Short squeezes, however, are not unusual for the hardest to borrow stocks. For these stocks, trading costs from squeezes are high and have a significant impact on the returns to short selling. For hard-to-borrow stocks, short sellers also miss out on significant abnormal returns because squeezes force them to close positions. [ABSTRACT FROM AUTHOR]

This article provides a survey of China's initial public offering (IPO) market, focusing on IPO pricing, bids and allocation, and aftermarket trading. We show that strict regulations result in suppressed IPO offer prices and high initial returns, causing a high cost of going public. Investors treat IPOs as lotteries with extremely high short-term returns, with little attention to the long term. The auction selling method, however, works in the way it is supposed to. Mutual funds bid in a more informative way than other investors, and their advantages are unlikely to be due to underwriters' preferential treatment. We also discuss the latest registration-system reform. [ABSTRACT FROM AUTHOR]

We demonstrate that investors in initial public offering (IPO) firms value revenues and that the number of U.S. Securities and Exchange Commission (SEC) revenue recognition comment letters issued on the S-1 registration statement are positively associated with reported revenues. We also find that IPO managers report revenues opportunistically in the fiscal year just prior to the offer. In additional analysis, we find that discretionary revenues are associated with significantly higher first day IPO stock returns but significantly lower 1 year stock returns. Our results are consistent with the incentives of managers to report revenues opportunistically outweighing the higher monitoring and regulatory scrutiny pre-IPO. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Going public by merging with a Special Purpose Acquisition Company (SPAC) is much more expensive than conducting a traditional IPO. We rationalize why some companies merge with a SPAC by listing the potential benefits. We analyze the agency problems that certain SPAC features address. SPAC IPO investors and deal sponsors have earned remarkably high annualized average returns, although we warn that recent deals are likely to disappoint. Public investors in the merged companies have earned very low market-adjusted returns on an equally weighted basis, although high redemptions on the worst deals have limited the amount of money that they lost. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

At the time of an initial public offering (IPO), firms seek to maximize their stock market value. The authors theorize and show that a firm's innovation potential—firm outputs and activities that contribute to the development of future new products—can be used by the managers of IPO firms as a credible signal of the quality of the firm. Using a sample of 370 IPO firms from the consumer-packaged goods and pharmaceutical industries, and three metrics of innovation potential, the authors show that firms' innovation potential is (1) positively associated with the initial value of the IPO and with the first-day IPO returns and (2) negatively associated with the extent to which insiders sell their shares at the time of the IPO. The effectiveness of the three metrics of innovation potential as a signal of firm quality varies: patents have a stronger impact on insider sales than preannouncements and generic references to future innovation, while preannouncements have the strongest impact on first-day IPO returns. The article presents a nuanced view of the extent to which various firm stakeholders consider information about firms' innovation potential to be a credible signal that reduces the adverse selection present in IPO deals with insider sales. [ABSTRACT FROM AUTHOR]

Purpose: This study seeks to explore the intricate relationship among supply chain transparency, digitalization and idiosyncratic risk, with a specific focus on newly public firms. The objective is to determine whether supply chain transparency effectively mitigates idiosyncratic risk within this context and to understand the potential impact of digitalization on this dynamic interplay. Design/methodology/approach: The study utilizes data from Initial Public Offerings (IPOs) on China's Growth Enterprise Board (ChiNext) over the last five years, sourced from the CSMAR database and firms' annual reports. The research covers the period from 2009 to 2021, observing each firm for five years post-IPO. The final sample comprises 2,645 observations from 529 firms. The analysis employs the Hausman test, considering the panel-data structure of the sample and favoring fixed effects over random effects. Additionally, it applies the high-dimensional fixed effects (HDFE) estimator to address unobserved heterogeneity. Findings: The analysis initially uncovered an inverted U-shaped relationship between supply chain transparency and idiosyncratic risk, indicating a delicate equilibrium where detrimental effects diminish and beneficial effects accelerate with increased transparency. Moreover, this inverted U-shaped relationship was notably more pronounced in newly public firms with a heightened level of firm digitalization. This observation implies that firm digitalization amplifies the impact of transparency on a firm's idiosyncratic risk. Originality/value: This study distinguishes itself by providing distinctive insights into supply chain transparency and idiosyncratic risk. Initially, we introduce and substantiate an inverted U-shaped correlation between supply chain transparency and idiosyncratic risk, challenging the conventional linear perspective. Secondly, we pioneer the connection between supply chain transparency and idiosyncratic risk, especially for newly public firms, thereby enhancing comprehension of financial implications. Lastly, we pinpoint crucial digital conditions that influence the relationship between supply chain transparency and idiosyncratic risk management, offering a nuanced perspective on the role of technology in risk management. [ABSTRACT FROM AUTHOR]

On 18 November 2021, Paytm, India's leading digital payments and financial services company, went public, but its shares were listed at a surprising 9% discount from the initial price. This underperformance of Paytm's highly anticipated ₹183 billion IPO, the largest in India, stunned the market despite the BSE Sensex index hitting an all-time high in October 2021 with a 50% increase over the previous year. While other unicorns like Zomato (thirty-eight times oversubscribed) and Nykaa (nearly eighty-two times oversubscribed) saw tremendous success in the capital market, Paytm struggled on the stock exchange. This raised questions about why a prominent brand with 3.33 billion customers could not effectively engage with stakeholders and failed to excite investors as Zomato and Nykaa did. Raghavendra Das, a communications consultant seeking to work with Paytm, assessed the company's communication strategy and shared insights with MD and CEO Vijay Shekhar Sharma. The big question now is, what steps should Paytm and Sharma take next? [ABSTRACT FROM AUTHOR]

This article documents the partial shift from the government-based approval system to the market-based registration system and uses a stochastic frontier model with inefficiency heterogeneity (SFMH) to separate the component of IPO initial returns into premarket underpricing and aftermarket mispricing, then examines the effect of the implementation of registration system on premarket and aftermarket pricing efficiency, respectively. The results show that the premarket underpricing is lower but the aftermarket mispricing is higher under the registration system than under the approval system. Overall, this article indicates that the implementation of registration system has improved the IPO pricing efficiency of the premarket but reduced that of the aftermarket. [ABSTRACT FROM AUTHOR]

In initial public offerings (IPOs), underpricing refers to pricing the issue at a price lower than its fair value which results in the listing price being much higher than the issue price. This higher information asymmetry results in more underpricing. To reduce such asymmetry, the Securities and Exchange Board of India (SEBI) introduced IPO grading and anchor investor participation in India. This article aims to assess the impact of these two factors on the underpricing of Indian IPOs over 2007–2017. This study uses multivariate regression analysis to compare the impact of graded versus ungraded IPOs and of anchor-backed versus non-anchor backed IPOs on underpricing; it finds that IPO grading and anchor investment do not have a significant overall impact on underpricing. These results justify the scrapping of mandatory IPO grading. Although insignificant, IPO grading has a greater influence on underpricing than anchor investor participation. Furthermore, the current study also analyses the subscription patterns of qualified institutional buyers (QIBs), non-institutional investors (NIIs) and retail individual investors (RIIs) and their influence on one another. Accordingly, it reveals that QIB subscription influences both NII and RII subscriptions. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of manager-investor interaction quality on stock returns by utilizing an online IPO roadshow dataset and leveraging a word-embedding model. We find that such interactions are positively valued, as reflected in initial returns. The effect is particularly pronounced for firms characterized by higher levels of information asymmetry, greater investor attention, increased question uncertainty, or discussions on topics not covered in prospectus. Additionally, our research reveals that effective management communication leads to increased first-day turnover rates and thus higher returns. These heightened returns persist up to 180 days following the IPO, without displaying a significant long-term reversal associated with interaction quality. These findings underscore the meaningful impact of the quality of manager-investor interactions on firm valuation. [ABSTRACT FROM AUTHOR]

This study conducts a systematic literature review of San Diego’s innovation ecosystem to analyse its evolution, dynamics, the most influential (key) stakeholders, and success factors. 1,405 documents from Scopus and 809 documents from Web of Science (WoS) were retrieved and analysed to obtain a final sample of twenty articles. The ecosystem’s key organisational stakeholders were identified as UC San Diego, research institutes, venture capitalists, pioneer and leading companies and intermediary organisations. Regarding success factors, key political factors include research funding, other public funding and policies that foster, for example, the actors’ geographical proximity. Key economic factors include start-up support systems, company acquisitions and initial public offerings (IPOs). Several vital social factors, such as collaboration, social networks and risk-taking culture, were also identified. Finally, the key technological success factors include technology transfer, specific focus areas and critical mass in research and development. This systematic review, complemented by expert interviews, provides a comprehensive view and validation of the stakeholders and factors that have contributed to the emergence, evolution and dynamics of the innovation ecosystem. The study also exemplifies an originally nonleading city’s path to success, which can provide valuable innovation policy and planning insights for other nonleading regions. [ABSTRACT FROM AUTHOR]

The different stakeholder groups and their influence on value distribution have received increasing attention from organizations and academia. In the recent stakeholder literature, there has been a theoretical development on value distribution, considering the attributes of strategic importance and power; however, the literature still lacks empirical studies to analyze and understand the relationship. This paper examines the association between stakeholders' power and strategic importance and the value distribution to them by publicly traded companies on the Toronto Stock Exchange (TSX). To obtain relevant information on companies' treatment of their stakeholders, we analyzed the content of 104 prospectuses for the TSX IPO process from 2008 to 2019. The results reveal that power and strategic importance are relevant to the distribution of value to stakeholders and that the strategic importance of stakeholders has a more significant influence than their power. Regarding contributions, our study advances previous debates in stakeholder literature in theoretical and practical terms. [ABSTRACT FROM AUTHOR]

Based on three large ensemble (LE) historical simulations, this study explored the contribution of low‐frequency internal variability (IV) modes to global mean sea surface temperature anomaly (GmSST) during 1920–2010. The dominant contributions of low‐frequency IV modes to GmSST in the three large ensembles are quite different. The low‐frequency IV modes in the Indo‐Pacific Ocean (i.e., IPO and IOBW) dominate the low‐frequency GmSST signal for the CESM2 and MPI LEs (the ensemble median contribution value reaches 70%–80%), while the low‐frequency IV modes in the North Atlantic dominate for the FGOALS‐g3 LE (contribute more than 50%). CESM2 LE and MPI LE can reasonably reproduce the impact of low‐frequency modes in the Indo‐Pacific ocean as observed, but FGOALS‐g3 LE underestimates this impact and overestimates the extratropical impact (on GmSST) of the North Atlantic. After removing the external forcing, it still retains the excessive signs in low‐frequency IV modes in FGOALS‐g3 LE over the North Atlantic. Furthermore, we used a pattern adjustment approach to revise the surplus effect in the North Atlantic. After revision, the contribution of decadal IVs in the North Atlantic to GmSST is reduced by 30%. Meanwhile, the tropical contribution in the Indo‐Pacific Ocean is increased and that is closer to the observed one. This approach can be employed to revise the weak or strong IV signals in other regions or LEs, which is meaningful for reducing the uncertainty of IV signals. [ABSTRACT FROM AUTHOR]

The shipping industry transports nearly 80% of the goods worldwide and requires large funding. The shipping industry shifted from debt to equity as the source of funding in the last decade. Because most shipping companies already had their initial public offering before 2013, these companies tend to engage in follow-on equity offerings (FPO). However, the challenge faced by the shipping companies is the lack of knowledge on successful FPO. The purpose of this study is to identify the most influential factors affecting shipping companies’ FPO from the investor perspective. This research applies a hybrid multiple-criteria decision-making model integrating the fuzzy-Delphi method and Decision-Making Trial and Evaluation Laboratory, processing survey responses covering four dimensions and 16 criteria from 33 investment experts. The results show that financial indicator is the primary cause affecting offering condition, technical indicators. An increase in earnings per share would help the financial performance of the shipping companies to appear most attractive to investors. [ABSTRACT FROM AUTHOR]

This paper investigated how hiring one of the Big 4 auditing firms helps initial public offering (IPO) owners attract venture capitalists' (VCs) backing when going public to address the gap in auditing and venture capital literature. For this, the paper examined a large dataset from 1995 to 2019 consisting of 33,536 IPO firms from 22 countries with diverse socioeconomic, political, and cultural contexts. The study found that hiring Big 4 auditors increases IPO owners' chances of recruiting VCs by up to 50%. The analysis also supports prior findings, which state that IPO owners strategically choose Big 4 audit firms to lower agency costs and send quality signals to improve openness and disclosure as well as boost VCs' confidence in the IPO market. This research offers multiple benefits to academics, policymakers, investors, and issuers. [ABSTRACT FROM AUTHOR]

We study the relationship between ownership concentration and firm value using hand-collected data on the stakes of owner–managers before and after initial public offerings (IPOs). We instrument for the reduction in stake using market returns shortly before IPOs. Short-run market returns are plausible instruments because owners engage in market timing by selling more when prior returns are high, but high short-run returns are unlikely to directly affect firm value years after the IPO. As predicted by agency theory, a large reduction in ownership concentration at the IPO is negatively related to valuation. Future asset growth is low when owners have low stakes. This paper was accepted by Victoria Ivashina, finance. Funding: B. Larrain acknowledges funding from ANID/CONICYT Proyecto FONDECYT Regular [Grant 1180593]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2021.01039. [ABSTRACT FROM AUTHOR]

This research paper shed light on how small cap companies acquire funds. It focuses on a new trend available for small companies and for private investors instead of an old option or traditional way of Initial Public Offerings (IPOs) to raise money. The study focuses on changes happening. It justifies it for different reasons like new technology, too many rules for Initial Public Offerings, uncertain stock markets, wanting more control over their business, and thinking about growing for a long time. To understand these reasons better, the research referred to information from financial reports, academic studies, and market analysis. It focuses on small companies and private investors in India. The study suggests that small companies are now looking at other trending options to acquire money, like crowdfunding platforms and Special Purpose Acquisition Companies (SPACs), instead of just doing Initial Public Offerings. These alternatives have different advantages for the small cap companies like fewer rules to follow, more control over their business, and a focus on long-term growth. The research study focused on new trends or patterns of raising funds for companies like direct listings and using SPACs instead of Initial Public Offerings In nutshell this research helps us to know how small companies are changing their way of acquiring money. It gives insights that can help entrepreneurs, investors, and financial experts make better decisions in today's complex financial world. [ABSTRACT FROM AUTHOR]

In this article, the authors analyze the role of ESG characteristics in equity performance at both the firm and sector levels. They also construct a comprehensive data set to analyze and link the ESG role in the private, primary, and secondary markets. They find that non-green equity outperforms green equity in both private and secondary markets. In the primary market, the non-green IPOs are issued at a discount, relative to green IPOs. Their analysis shows that green equity is relatively overvalued, relative to non-green equity at the time of the IPOs. Sector-level ESG information dominates firm-level ESG information in explaining the outperformance of non-green firms in both private and secondary markets. The valuation/change in cash multiple at IPO verifies the higher valuation of green equity relative to that of non-green equity. ESG characteristics of PE firms, when being evaluated at the IPO, are conditional on the healthy financial fundamentals of PE firms. [ABSTRACT FROM AUTHOR]

This study examined the determinants of the long-term performance of 351 initial public offerings (IPOs) launched in Malaysia over the 2002-2010 period. This paper used a panel regression analysis framework based on the ordinary least squares (OLS) technique to examine the potential determinants of IPOs' long-term performance. The findings revealed that the volatility of aftermarket returns, the dummy ACE market and concentration ownership significantly influence the long-term performance of Malaysian IPOs. This paper offers important implications specifically for investors as the findings can help them understand more about public companies' long-term performance and how to better predict their performance. [ABSTRACT FROM AUTHOR]

This paper examines the impact of trade secret laws on the underpricing of initial public offerings (IPOs) in the United States, where we focus on the Uniform Trade Secret Act and/or the inevitable disclosure doctrine. Given that trade secret laws help firms protect their know-how in the form of trade secrets, we propose that trade secrets protected by these laws may result in increased corporate opacity, leading to greater IPO underpricing. Empirically, the average first-day returns of IPOs in states with trade secret laws are 12.7% higher than those in states without such laws. Using the information disclosed in the 10-K report on whether the firm owns trade secrets, we suggest that the existence of trade secret laws enhances the protection effect of firm maintenance of trade secrets, which leads to greater IPO underpricing. Further analyses show that the effect of trade secret laws is reinforced for IPO firms operating in complex industries, IPO firms with R&D investments, and large IPO firms, suggesting that trade secret laws increase the difficulties investors face in assessing the intrinsic value of such firms. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to review, discuss and synthesize the literature focusing on the Indian initial public offering (IPO) market. Understanding the Indian IPO market can help answer broader corporate finance questions. The growing number of IPOs in the Indian context, coupled with the increasing importance of the Indian economy in the global market, makes this review an essential topic. Design/methodology/approach: The systematic literature review methodology was adopted to review 111 papers published between 2002 and 2021. The authors used the Preferred Reporting Items for Systematic Reviews and Meta-Analyses approach during the review process. Additionally, the authors use a bibliometric review methodology to examine the pattern and trend of research in this area of interest. Furthermore, the authors conduct a critical review and synthesis of the top 20 papers based on citations. The authors also use a co-citation network and manual content analysis method to identify key research themes. Findings: This review helps in identifying major themes of research in this area of interest. The authors find that majority of the research has focused on IPO performance whereas post-IPO performance needs critical attention as well. The authors develop a comprehensive framework and future research agenda based on their discussion. Research limitations/implications: Meta-analysis of the literature can be conducted to gain better insights into the findings of prior studies. Practical implications: This review paper develops a comprehensive overview on Indian IPO market which can be of interest not only to Indian scholarship. India as an economy is increasingly gaining attention at the global level. Hence, the future research objectives as illustrated in the study can be of interest for the global scholarship also. Originality/value: To the best of the authors' knowledge, this is the first comprehensive review paper that examines, synthesizes and outlines the future research agenda on Indian IPO studies. This review can be useful for researchers, business policymakers, finance professionals and anyone else interested in the Indian IPO market. [ABSTRACT FROM AUTHOR]

The study examines the level of awareness among the investors about startup IPOs and analyses the relationship between independent variables such as size and purpose of IPO, company profile, financial performance, quality management and sector performance and investment decision in startup IPO which is the dependent variable. The research is conducted majorly using primary data collected from 360 two respondents across the state of Karnataka. The data so collected is analysed using the SPSS software. The statistical tools like multiple regression analysis and correlation analysis are used to analyse the data and hypothesis are tested using ANOVA. Five hypotheses were framed and tested to verify the effect of five independent variables on dependent variable. The outcome of the study reveals that, majority of the investors have awareness about the startup IPOs and size and purpose of IPO, company profile, financial performance, quality management and sector performance have positive relationship with dependent variable and these factors have highly considerable impact on investment decision in startup IPO in Indian stock market. This study concludes that 96.1% of the investment decision in startup IPO is influenced by the sector performance, financial performance, size & purpose of IPO, quality management and company profile. [ABSTRACT FROM AUTHOR]

We test the effect of going public on economic growth in the areas surrounding initial public offering (IPO) firms. We compare the effects of IPO filers that complete their IPOs with those that do not, using post-filing stock market fluctuations as an instrument for IPO completion. We show that IPOs that are large relative to the size of their counties lead to a 1.1 percentage point relative reduction in annual county-level establishment growth, with similar effects for employment and population growth. There are no corresponding effects for relatively small IPOs. These negative effects appear to be driven by a crowding out of local sector peers, but the crowding out also disrupts local agglomerations and slows down growth among other businesses that rely on local demand. Overall, our results indicate that macroeconomic gains from IPOs trade off against disruptions in local agglomeration economies where public firms originate. [ABSTRACT FROM AUTHOR]

Based on 259 articles published in the entrepreneurship, management, and finance literatures during 1990-2022, we provide an integrative review and synthesis of governance in new ventures. We structure our review around the formal contract between the new venture and its investors, and discuss the governance approaches of various pre-initial public offering investors across the three stages of the investment cycle: precontractual, contract design, and post-contractual. Pre-contractual governance and contract formation are explained using a signaling theory lens. To capture the intricacies of post-contractual governance, particularly for late-stage investors such as venture capitalists and private equity firms that have conflicting interests, multiple identities, and overlapping governance roles, we relax the core tenets of agency theory to direct academic inquiry toward a more sophisticated framework—multiple agency theory—that better reflects the complexities of post-contractual governance. Given the limitations of formal contracting in resolving the ambiguities of start-up governance, we integrate our narrative by using a complementary social embeddedness theory lens that highlights the importance of informal governance embedded in personal and social ties in creating implicit obligations based on trust, reciprocity, and reputation. Finally, we discuss how governance breakdowns can cause start-ups to fail, especially in their later stages. [ABSTRACT FROM AUTHOR]

In the past two decades, there has been a decline in the use of uniform-price auctions in favor of fixed prices in markets of peer-to-peer lending, equity crowdfunding, and initial public offerings. This article aims to analytically study why this trend might be occurring. The analysis reveals that, relative to a fixed price, a uniform-price auction leads to more herding and strategic delay of bid submission and, consequently, a smaller transaction completion probability and lower expected revenue. These predictions are consistent with the empirical regularities observed for the bidding behavior and funding outcomes on Prosper, one of the leading peer-to-peer online lending platforms, and those documented in the literature for markets of equity crowdfunding and initial public offerings. [ABSTRACT FROM AUTHOR]

IPO firms in the technology industry are regarded as vulnerable due to their limited resources, inexperience, and relatively short technology and product lifecycles. They also lack a track record to signal to the market that they are equipped with sufficient ability to overcome the challenges faced in this highly competitive environment. This study examines whether board diversity helps IPO firms perform better in such a challenging environment; furthermore, we explore the potential contingencies that magnify or weaken the benefits of board diversity by examining how its impact is moderated by firm size and board tenure. Using a sample of 363 IPO events within technology firms over 11 years, we find that higher board diversity is associated with better post-IPO performance; however, a larger firm size and longer board tenure decrease the value created by board diversity. The findings are robust to alternative measures of performance and board diversity. Our study contributes to the literature by demonstrating the significant impact of board diversity on the performance of technology IPO firms as well as explaining the conditions under which boards effectively execute their resource dependence roles. [ABSTRACT FROM AUTHOR]

This article empirically examines how relative exploration affects high-tech companies' initial public offering (IPO) performance. Analysis of data from 225 high-tech companies listed in the SSE Sci-Tech innovation board (SSE STAR) market shows that high-tech companies with high exploratory innovation tend to generate inferior IPO performance compared to those with high exploitative innovation. Further, we explore the moderating effects of political ties and university cooperation from the triple helix perspective. Results suggest that political ties and university cooperation can alleviate the negative relationship between relative exploration and IPO performance. These findings contribute to the literature on how exploration-exploitation affects external financing by integrating exploration-exploitation and triple helix interactions research. These offer important practical implications for high-tech companies in China. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to examine the impact of the International Financial Reporting Standards (IFRS) mandate and differences in national institutional quality on the underpricing of Initial Public Offering (IPO) companies. Design/methodology/approach: Multiple Difference-in-Differences (DiD) ordinary least squares estimations were conducted for 100 corporations listed on the Saudi Arabian stock market using country-level institutional quality data from 2005 to 2017. Findings: IFRS requirements and improvements in institutional quality have a combined effect on minimizing IPO underpricing. The analysis of the combined impact of IFRS requirements and differences in transparency revealed that IPO vendors leave $5 on average for IPO investors to cash out post the IFRS mandate, compared to $29 previously. Thus, IFRS serves as a quality certification instrument that alleviates IPO investors' ex ante uncertainties, even in nations with undeveloped institutions. Practical implications: The findings may be beneficial to researchers and policymakers. The results suggest that institutional quality enhancements and obligatory IFRS implementation highlight IFRS's synergistic influence on the IPO market. While European harmonization efforts drove the adoption of IFRS in Europe in 2005, Saudi Arabia's adoption of IFRS is not being driven by such initiatives (Daske et al., 2008; Persakis and Iatridis 2017). In reality, when IFRS was officially imposed in Saudi Arabia in 2008, it, like many other emerging market nations, made considerable reforms to its formal institutions. However, research on the combined impact of IFRS and disparities in institutional quality in emerging IPO markets remains sparse. Emerging markets represent more than half of economies that use IFRS. Therefore, to the best of the authors' knowledge, this study is the first to conduct an empirical investigation to identify this combined effect in emerging countries using the DiD analytical technique. Equity market legislators remain concerned regarding IPO underpricing, as it has a detrimental influence on economic growth (Bova and Pereira, 2012; Jamaani and Ahmed, 2021; Mehmood et al., 2021). Depending on the degree of information asymmetry in national stock markets, underpricing costs increase the cost of going public for entrepreneurs. Consequently, prospective private firms are discouraged from accessing equity financing through the stock markets. This is likely to impede private sector development plans, causing a negative effect on economic growth. Originality/value: Emerging countries represent over 50% of the IFRS mandating economies. However, there is insufficient research on the combined effect of IFRS requirements and improvements in institutional quality in developing IPO markets. To the best of the authors' knowledge, this study is the first empirical attempt to identify this combined effect in one of the largest developing countries. The results may aid academics and policymakers in better understanding the interaction between these two variables. [ABSTRACT FROM AUTHOR]

Growth and innovation are primary arguments for firms that aim to go public and access resources from the stock market. So it is ironic that going public is, for a majority of firms, associated with a pronounced slump in breakthrough innovation. This article proposes an actionable, marketing-related explanation for why some firms that go public manage to beat the post–initial public offering (IPO) innovation slump: innovation imprinting. The authors argue and demonstrate that firms that engage in innovation imprinting before going public attract a segment of concordant investors whose risk preferences are more supportive of breakthrough innovation than investors at large. These investors, in turn, reward the firms' continued introduction of breakthrough innovations after they have gone public. By analyzing the innovation patterns of 207 firms in the consumer packaged goods sector before and after an IPO, the authors observe that one-third of firms are able to maintain or beat their pre-IPO levels of breakthrough innovations after going public. By studying their actions, the investors they attract, and their financial performance and survival rates, the authors provide empirical evidence for the importance of innovation imprinting and concordant investors in helping firms beat the post-IPO innovation slump. [ABSTRACT FROM AUTHOR]

I study venture capital firms' (VCs) use of public market information and how attention to this information relates to private market investment outcomes. I link web traffic to public filings hosted on EDGAR to individual VCs. VCs analyze public information about industry peers before most deals. An increase in industry filing views relates positively to the probability of an exit through acquisition, suggesting that public information helps identify paths to acquisition. The effect is stronger when the VC has less access to private information, especially for low-reputation VCs. Policymakers should consider spillover effects on private markets when setting public disclosure requirements. [ABSTRACT FROM AUTHOR]

We provide evidence regarding two unanswered and consequential questions regarding share trading liquidity, a primary motive for US listings, for the prominent listing cohort of foreign-firm US initial public offerings (FIPOs). First, we test whether FIPOs exhibit a 'liability of foreignness (Bell et al. 2012) in liquidity' (LFL) compared with matched domestic-firm IPOs (DIPOs), despite listing requirements that are more stringent than for the mature cross-listed foreign firms studied previously. Second, we test whether US IPO LFL is moderated by FIPO home country institutional attributes that promote liquidity. Our findings for 327 FIPOs from 36 countries between 1990 and 2012 reveal that US IPO LFL is moderated, but not eliminated, by FIPO home country attributes, thus indicating incomplete bonding with US institutions. These findings extend prior research and serve to inform foreign firms considering US IPOs, exchanges competing for them, listing facilitators, regulators, and investors regarding a salient listing consideration. [ABSTRACT FROM AUTHOR]

This paper addresses a void in the research on auditing and initial public offering (IPO) failure by investigating the impact of the Big 4 auditing firms on the likelihood of an IPO failure. This research is the first comprehensive analysis of more than 33,000 global IPOs that either failed or were successful between 1995 and 2019 across a wide range of nations with vastly different regulatory, cultural, and economic settings. A cross-sectional probit regression model is utilized to investigate the influence of hiring the Big 4 auditing firms on IPO failure, building upon prior studies on IPO failure. We found strong evidence that IPO failure rates were diminished by up to 67% when one of the Big 4 auditing firms was involved in auditing the IPO prospectus. For IPO founders, hiring Big 4 auditors before an IPO is a quality signaling strategy that minimizes the risk of a failed IPO by reducing information asymmetry among IPO participants. Our findings provide useful policy implications. Hiring one of the Big 4 auditing firms before an IPO is a reassuring signaling strategy for founders, since it decreases information asymmetry among IPO investors and so lowers the risk of the IPO failing. Primary market investors now have access to credible evidence indicating that backing IPOs from companies that use the Big 4 auditing firms increases the likelihood of such IPOs being listed on stock exchanges and yields positive returns. This is the first time, as far as the academicians are aware, that conclusive evidence has been found of a strong inverse association between the presence of Big 4 audits and failure risk for IPO firms. Our research could be helpful to primary market regulators since it shows how crucial it is to encourage Big 4 audits in IPO companies. The quality work of the Big 4 auditors does lower the risk of failure in the IPO market, which might help owners of small private equities to list their firms on the IPO market, boosting economic growth. [ABSTRACT FROM AUTHOR]

We unravel the conditions under which the type of education found among board members mitigates the uncertainty in new equity markets. Our results indicate that issuers in low R&D industries—as well as those faced with complex organizational structures—leave less money on the table when their boards are dominated by executives with managerial skills. Conversely, boards with highly specialized members in small and knowledge‐intensive firms reduce underpricing. Finally, we document that both types of board education lessen initial public offering share–price volatility in the immediate post‐issue period. This research is the first to derive conclusive evidence that more executives in the boards with managerial skills and boards with highly specialized members facilitate price discovery in signaling issuer reputation on the first trading day. This study has implications that we provide investors with unique non‐financial information, boards' "education capital," that can be considered before making investment decisions. [ABSTRACT FROM AUTHOR]

This study explores the relationship between economic, social, and governance (ESG) activities and initial public offering (IPO) price stabilisation actions using IPOs listed on the Hong Kong stock exchange between 2004 and 2021 as samples. We find that IPO issuers that actively conduct ESG activities have higher ESG scores, which enhances price stabilisation. Furthermore, ex‐ante volatility serves as a potential channel through which ESG activities affect price stabilisation. Providing ethical and economic implications for companies, policymakers, and investors, our findings suggest that ESG activities are vital drivers of price stabilisation. [ABSTRACT FROM AUTHOR]

An initial coin offering (ICO) seeks to raise initial investments for companies by selling crypto tokens to individuals interested in crowdfunding. As ICOs have gained popularity, a lack of information regarding startup companies' prior financial status and business health has led to information asymmetry between potential investors and ICO projects. This study explores the informational cues necessary to bridge this gap. Employing signaling theory, we elucidate the presence of information asymmetry and conduct two case analyses to identify relevant informational cues. Twitter data from two ICO projects (Stratis and NEO), which achieved the highest return on investment at the time of data collection, are extracted and analyzed to identify informational themes. Our findings reveal multiple and distinctive themes of informational cues for each ICO project, demonstrating that transmitted signals vary across different stages and are generated by both the coin publisher and the public. This research illuminates the flow of informational cues between ICO initiators and potential investors on social media. By analyzing online communication threads using qualitative methods, this study significantly contributes to the understanding of information asymmetry in the context of ICOs. [ABSTRACT FROM AUTHOR]

This study looked at the asymmetric (nonlinear) links between Pakistan's environmental pollution, trade balance, human development index, foreign direct investment, natural resource rent, and IPO variability. The research used an annual data set from 1992 to 2019 and applied a unique co-integrating method known as asymmetric ARDL co-integration approach. The macroeconomic variables of environmental pollution, trade balance, human development index, foreign direct investment, and natural resource rent were found to have significant influences on IPO variability in both long-run and short-run asymmetric impacts. These findings highlight the important roles of the used variables in increasing IPO variability. This research suggests that Pakistan's weak macroeconomic conditions reflect the country's inadequate capital market growth. The country's lower IPO variability indicates a lack of trust among potential issuers and investors as a result of Pakistan's weak macroeconomic indices. The determined asymmetric results may be valuable for Pakistan's policymaking and stock market forecasting. Ignoring fundamental asymmetries may lead to misrepresentations of the implications. [ABSTRACT FROM AUTHOR]

Initial public offerings and mergers and acquisitions represent important opportunities for investors to exit and harvest their entrepreneurial success. Some firms are acquired shortly after their initial public offerings. This exit strategy is known as a double exit. In addition, issuing firms may choose to reincorporate in Delaware during their IPOs. In this study, we use hand-collected data from 1993 to 2020 to investigate whether and to what extent Delaware reincorporation may affect the M&As in the post-IPO stage. We use a Cox proportional hazard model to test the relation between Delaware reincorporation and the likelihood of being acquired for our sample IPOs. Recognizing that Delaware reincorporation is not a random decision, we adopt a Heckman switching regression method to estimate the relation between Delaware reincorporation and takeover premiums and announcement returns. We report that IPO firms choosing to reincorporate in Delaware experience a higher likelihood of being acquired compared to those IPO firms choosing to remain incorporated in their home states. We further document that IPO firms choosing to reincorporate in Delaware receive lower premiums in acquisitions, and experience lower abnormal returns on announcements. [ABSTRACT FROM AUTHOR]

Federal securities law creates a divide between the haves and the have-nots: On one side are the wealthy, who can invest in private companies; on the other side stand the rest of us, noses pressed up against the glass. Ordinary (or retail) investors are on the outside looking in because generally they can only invest in companies after they have gone public. Even the traditional process of going public typically keeps coveted initial public offering (IPO) shares in the hands of the rich. Put differently, even as a private firm debuts on the public markets, the wealthy take their cut before everyone else can get a taste. Special purpose acquisition companies (SPACs) invert the traditional process by using a merger, rather than an IPO, to bring a private company public. In doing so, they allow the public access to those private companies the conventional IPO denies them. But today SPACs are in decline, due in part to pressure from scholars and regulators who argue that SPACs are nothing more than back-door IPOs. Bucking the dominant narrative, we argue that SPACs are more than disguised IPOs. Indeed, their innovation is to radically expand the investment opportunities available to ordinary investors. Thus, SPACs offer a rare chance to reevaluate core assumptions underpinning the U.S. public securities markets--chief among them, that the law must prevent average investors from investing in anything but publicly traded securities. SPACs create a revolutionary public market in information about still-private companies, a situation unseen since before the Securities Act of 1933. In this Article, we use hand-collected data to empirically examine what this public market for private firms looks like. We argue that, with much-needed reform, SPACs could offer a viable, valuable, and more democratic alternative to the traditional IPO. [ABSTRACT FROM AUTHOR]

Underwriters play a pivotal role in the IPO process. Information entropy, a tool for measuring the uncertainty and complexity of information, has been widely applied to various issues in complex networks. Information entropy can quantify the uncertainty and complexity of nodes in the network, providing a unique analytical perspective and methodological support for this study. This paper employs a bipartite network analysis method to construct the relationship network between underwriters and accounting firms, using the centrality of underwriters in the network as a measure of their influence to explore the impact of underwriters' influence on the distribution of interests and audit outcomes. The findings indicate that a more pronounced influence of underwriters significantly increases the ratio of underwriting fees to audit fees. Higher influence often accompanies an increase in abnormal underwriting fees. Further research reveals that companies underwritten by more influential underwriters experience a decline in audit quality. Finally, the study reveals that a well-structured audit committee governance and the rationalization of market sentiments can mitigate the negative impacts of underwriters' influence. The innovation of this paper is that it enriches the content related to underwriters by constructing the relationship network between underwriters and accounting firms for the first time using a bipartite network through the lens of information entropy. This conclusion provides new directions for thinking about the motives and possibilities behind financial institutions' cooperation, offering insights for market regulation and policy formulation. [ABSTRACT FROM AUTHOR]

The article highlights the resurgence of interest in hydrogen amidst soaring stock prices in other sectors, emphasizing the overlooked potential of hydrogen fuel cells. Topics discussed include the stock market's cyclic nature, the promising future of hydrogen economy, and the pivotal role of mature technology companies in the burgeoning hydrogen sector.