We also find in Table 2 a significant difference between ECOs and the full sam- ple of IPOs with regard to whether the offer price is an integer, whether the deal involves a high technology or Internet firm, the rank of the underwriter, whether the issue is a pure primary offering, market movements for the 15-day period prior to the offering, whether there is positive price adjustment prior to the offering, and whether the issue occurred during the 1999 to 2000 bubble period. It is interesting to note that once we match by industry, date, and size, these variables are no longer significantly different. To the extent that these variables can be used as proxies for information asymmetry, it will be possible to explain some of the differences in underpricing and the costs of goingpublic between ECOs and IPOs. Also interesting is the significant difference between the negative price adjustment of -7.35 percent for ECOs and -5.57 percent for the matched sample of IPOs. The results imply that with less information asymmetry bad news will hit the ECO harder than the matched sample IPO.
Market-timing theories: Asymmetric information is one of the well-known models explaining goingpublic, Lucas and Robert (1990) worked on this model, and they find that firms postpone their equity issue if they know they are currently undervalued, given the bear marketplaces too low value of firm, hence, entrepreneurs delay their IPOs until a bull market offers more favorable pricing. Supporting the above findings, Choe et al. (1993) prove that firms avoid issuing in periods where few other good-quality firms issue. Other theories have argued that markets provide valuable information to entrepreneurs (“information spillovers”), who respond to increased growth opportunities signaled by higher prices, Subramanyan and Titman (1999) and Schultz (2000).
Preparing and filing the registration statement is a relatively complicated, time-consuming, technical process requiring substantial planning and coordination. It involves providing the information specified by the SEC form and complying with the applicable SEC rules in the most efficient manner possible. It requires a great deal of effort by the management team, lawyers, and independent accountants to position a company as accurately and positively as possible, while also disclosing any negative risk factors. It is during the preparation process that a scheduled timetable for goingpublic can take longer than expected, causing a delay in the anticipated filing date. It is therefore imperative that the entire team be thoroughly familiar with the registration statement requirements, be cognizant of the deadlines set, periodically assess the status of specific sections of the registration statement, and ensure that reviews of each section are timely. The registration statement (Form S-1) consists of two principal parts. Part I contains the essential facts regarding the business operations, financial condition, and management of the company that are required to be included in the prospectus, including the company’s financial statements. Part II contains additional information that is not required to be included in the prospectus.
Having analyzed the determinants of goingpublic, we verify whether companies artificially manage their financial ratios in a year directly preceding their decisions to go public. For this purpose, we analyze yearly changes in basic financial ratios in the period around public offerings. In particular, we build logit models explaining ex-post probability of being a WIPO-, NIPO- or BPO-firm with firms’ specific characteristics and current yearly changes in financial ratios. Our dependent variables are the same as before WIPO, NIPO and BPO, yet we do not use lagged firms’ financial ratios as independent variables. In the specifications for WIPO and NIPO we include industry group dummies, which are removed from models for BPO due to the limited number of observed public bond offerings which can be analyzed in a post-offering setting. Each model includes SIZE, AGE and GDP to control for a company’s size, age and stage of the economic cycle, respectively. It should be noted that in all specifications the sets of explanatory variables are jointly statistically significant, which allows for statistical inference.
earnings determination around the offering. Additionally, Teoh et al. (1998a), ascertain that this type of EM practice associates with lower long run IPO returns. This is in accordance with the view that the short term benefits stemming from inflated offer prices can induce idiosyncratic managerial behavior invisible to potential investors. Substantial amount of relevant research supports as well the notion of insistent accrual usage by executives around the new issue day (DuCharme 2001, Roosenboom et al 2003, DuCharme 2004 and Marquardt and Wiedman 2004). Interestingly, Ball and Shivakumar (2008), contest this line of reasoning on the grounds that IPOs generate great deal of media coverage and capture the attention of parties which eventually assume facilitating role in the goingpublic process (financial analysts, policy makers, auditors and perspective investors). Consequently, they claim that new issuers confront strong demand for production of highly accurate financial statements. Investigating a sample of previously private British corporations which filed reports akin to US IPO prospectuses; they evidence that these entities apply a more conservative reporting approach. Arguably, this could constitute a rational response to the market player’s quest for superior quality accounting information. Conversely, Lo (2008) confutes this argument stating that more experienced executives are prone to deliver incomparable reports where the exploitation of earnings is less visible. As a result, the sample of Ball and Shivakumar appears vulnerable to self-selection bias and probably leaves out newly listed companies that are actually susceptible to EM practices. Hence, the conjecture of no artificially inflated earnings by the issuer may well lose validity.
This study examines the goingpublic process in Poland. In contrast to other papers the characteristics and the short-and long-run price behavior of three groups of firms are compared with each other: (i) Case-by-case privatization initial public offerings (PIPOs), (ii) private sector initial public offerings (IPOs) and (iii) certificates and shares of the mass privatization program (MPP). Unlike other Central and Eastern European countries (e.g. Russia, Czech Republic or Slovakia) Poland did not start the privatiza- tion process with an MPP; instead case-by-case privatizations were carried out over the first years of the transition. An MPP was started in the mid nineties with the distribution of National Investment Fund (NIF) certificates to Polish citizens, who after a while were able to convert the certificates into shares of 15 National Investment Funds (NIF shares). As the certificates were and the NIF shares still are officially traded on the WSE, this provides the rare opportunity to compare case-by-case privatizations and the MPP on the basis of their long-run performance.
Hollywood cinema as a responsible cultural institution is beyond question. On the other, their modes of appeal were relatively crude. The obvious practical obstacle to Hollywood first major cycle of family films during the mid-1930s is their attempt to construct a unified audience from a pluralistic movie-goingpublic. Most children, in all probability, had as little interest in Little Women or David Copperfield as the majority of wives and mothers had in King Kong. In fact, Dale’s study of children’s movie attendance – which, admittedly, was conducted several years before the emergence of the family feature film, in 1929 – found that even pre-adolescent children (especially boys) attended theatres alone or with friends as often as with their families, and this habit became increasingly common during adolescence. 99 Then again, it is important to
nificantly to enhancing understandings of practice. It can also inflect, as a new paradigm, the discovery-based model of research that dominates the academic field by questioning assumptions about objectivity, uncovering the richness of context-related epistemologies, and challenging expectations regarding methodology or theory (Rege Colet, McAlpine et al., 2011; Fanghanel, 2012). I am inspired in my reflection by the work of Callon et al. (2001) who, focusing specifically on scientific research, seek to promote a “dialogic de- mocracy” space for science research (p. 10). In their model, there is a strong emphasis on the need to combine laboratory-based experiments with collaborative user-led research. I propose that SoTL is a democratic form of inquiry as it enables multiple voices (in clud- ing academics, students, and student support specialists, for example) to be heard in the pub lic space; it is also a dialogic mode of inquiry because of the dissemination strategies it uses, which are based on discussions and dialogue, where “goingpublic” means more than just publishing in academic journals.
In summary, most studies on the performance of initial public offerings seem to share two common features: the adoption of a short-term perspective and a focus on the financial side of the phenomenon. Even when these studies investigated how variables of organizational or institutional nature affect the success of an IPO, they invariably adopted financial measures of success such as the post-IPO market capitalization (Stuart, Hoang and Hyble, 1999), the amount of capital raised (Deeds, Decarolis and Coomb, 1997) or the short-term increase of the stock price (Welbourne and Cyr, 1999). Although these financial measures provide a reliable way to assess the performance of some dimensions of an IPO, however, they tend to reinforce the assumption that IPOs are essentially a financial matter. The fundamental goals that a firm pursues in goingpublic, then, come to be taken for granted and is therefore synthesized in the notion of simply raising additional capital to finance growth. Conversely, our research attempts to remove this preconceived notion and questions this general assumption, thereby approaching the goals of goingpublic objectively, rather than an unquestioned starting point. A closer and more comprehensive look at the decision process leading to an IPO revealed that the decision to go public may be in fact be influenced by a more complex set of motives and may be supported by a much broader range of benefits.
Information Asymmetry and Adverse Selection Costs: The economics of information is based on the premise that different parties of a transaction often have different levels of information about the transaction. Information asymmetry refers to a situation in which sellers often have superior information than buyers about some aspect of product quality. Akerlof (1970) pointed that information asymmetry prevails in all markets. He identified the fact that if the good quality sellers have no means to signal high quality, all products in the markets are sold at a single price reflecting the average quality level of the market. This leads to a situation where the high quality sellers have no other choice than to withdraw from the market because high quality sellers in an information asymmetrical market have to sell products at lower prices than actual worth of their products. Ultimately only “lemons” (bad quality products) are sold on the market, which is how buyers’ also view the products being sold in the market place. This leads to a market failure situation referred to as “adverse selection”. Leland and Pyle (1977) noted that the information asymmetry is particularly high in the primary markets. In IPO situations, investors are generally less informed than the issuers about the true value and quality of the company doing an IPO. Thus prevailing information asymmetries about the quality of issuers in IPO market results in adverse selection and should be a factor influencing the firms’ goingpublic decision (Pagano et al., 1998 and Albornoz and Pope, 2004). They insisted that information asymmetry adversely affects the average quality of the companies seeking a new listing and thus affects the price at which their shares can be sold.
Our work differs markedly from these studies in terms of both scope and method. First, we examine a large variety of managerial aspects of the IPO process, whereas the emphasis of earlier studies is on the decision and implications of goingpublic. To the best of our knowledge, most of the issues that we address have not been covered by previous CEO/CFO surveys. Our study is also the first to systematically exam- ine managerial views on the determinants of IPO success. Second, we use in-person, one-to-one interviews, whereas the previous studies are primarily based on mail ques- tionnaires. Our interviews were semi-structured through a uniform set of questions, with the flexibility to discuss interesting responses in more detail. Many questions were open-ended to leave room for unanticipated views and experiences. Important advantages of this approach are in the quality and completeness of the collected infor- mation. Furthermore, unlike mail questionnaires, the personal interviews enable us to guarantee that respondents were truly key executives who had been closely involved in the IPO process.
Allows company to enhance growth: The most apparent merit of goingpublic is the cash proceeds generated from the offering. As long as the company discloses the purpose for which it is using the money, it may freely use it in a variety of ways to help the company. In most cases, the money is used to increase working capital, to enhance marketing efforts, to acquire new technologies or divisions, to pay for research or invest in plant modernization, or to repay its debt. Shareholder liquidity: A company’s decision to go public enables investors to sell off their shares at any time in the secondary market, making them an attractive and highly liquid instrument to opt for. Moreover, even the shares that are in the hands of private institutional investors can be easily liquidated.
The draft preliminary prospectus is generally pre- pared primarily by the issuer and its counsel, but members of the working group actively contribute to the drafting. Preparation can take several weeks depending upon the complexity of the issuer and its business, and whether any corporate restructuring is required prior to goingpublic. Once an issuer decides to go public, however, there is generally a push to move through the process as quickly as possible in order to offer the securities while the markets remain receptive and before market conditions change. Appendix B sets out a complete goingpublic timetable. The prospectus process is a multi-step process. The first step involves preparing and filing a preliminary prospectus, which is, essentially a draft prospectus that excludes certain content including pricing information until the final prospectus is filed. Prior to filing, the preliminary prospectus goes through a due diligence review by the issuer, the underwriters and their respective counsel to ensure accuracy. Once the preliminary prospectus is certified by the issuer and the under- writers, it is filed with the Securities Commissions. During the period between the receipt of the preliminary prospectus by the issuer from the Securities Commissions and the final prospectus filing, often called the “waiting period”, the under- writers may solicit expressions of interest, but may not actually finalize any sales. The underwriters
included. This raised an ethical dilemma, much debated among the team, about withdrawing consent once material had been made publicly available. Indeed, as one of the other PRAs pointed out to Shekeila, her film was ‘published online already’ (see Zimmer 2010). Yet, for Shekeila, her concern was about the medium through which such public audiences might be convened. As she reasoned, ‘with them already being public, that's fine because someone that I haven't told will have to search for it [but] for it to be on BBC Three, let me just repeat, [it’s the] British Broadcast Corporation!’ (Group discussion, 28/11/13). Her stance thus raised the need to consider more directly the limits of ‘goingpublic’ to achieve mutual recognition; that placing the ethical imperative on recognition is not the same as unfettered public exposure, and that perhaps our own regimes of visibility - as professional researchers seeking
There are certain disadvantages to goingpublic which should be considered by a company contemplating becoming a publicly traded company. Among the most commonly cited disadvantages are: (A) Expenses. The expenses of goingpublic are substantial (see discussion below). Once the company is publicly traded, ongoing annual expenses can also be substantial (estimates range from $30,000 to over $100,000 annually even for small companies) and administrative problems can increase. Routine legal and accounting fees for most companies will increase (due primarily to additional audit and reporting requirements) and the company will incur additional fees of transfer agents or registrars, public relations consultants and the like. There is also a significant cost in terms of executive time devoted to shareholder relations and public disclosure.
In this paper we use agent-based computational modelling and computer simulations to examine the interrelationship between different selling strategies for goingpublic. A great deal of recent empirical evidence suggests that to maximise the revenue raised from the shares sold in the public offering, it is fundamental to choose the appropriate design for the sale which, in turn, reflects the final ownership structure. This literature establishes that the market for shares is segmented and, particularly, that firms manage the sale of shares with the purpose of discriminating between relatively small and passive investors and applicants for large potentially controlling blocks. One of the key questions in this area, then, is: How and to what extent should this heterogeneity among potential investors influence the firm’s strategy for selling shares? Here we attempt to address this question from the standpoint of using agent-based computational modelling and computer simulations. Results show that the design of the sale is an important determinant of the performance of the negotiation process through which the firm is sold. A sequential sale beginning with an initial public offering of dispersed shares, followed by a negotiated sale of a controlling block is, in general, more effective than other alternative selling strategies. Changing the negotiation protocol itself can act as an effective way of impacting upon the revenue raised and the length of the process. The interrelationship between the method of sale and the performance may also depend on the degree of cognitive accuracy that characterises the negotiating agents’ mental representations of their physical and social environment.
Bistrova et al. (2011) investigated the impact of goingpublic decisions on the equity performance and profitability of 36 “blue-chip” companies listed on the Baltic stock exchanges between 2007 and 2010. The results of the study discovered “a positive relationship between stock performance and sufficiency of equity capital”. Moreover, there was found an inversed relationship between the level of debt and capital profitability confirming the pecking order theory. The findings suggest using self- generated funds to goingpublic strategy. In another investigation of the Baltic IPOs Bistrova & Lace (2010) demonstrate that the profitability of the companies declines in the first two years after the funds attraction and that the solvency position strengthens right after the event but in the second year it reaches the level of pre-IPO financial stability. The authors offer two explanations of this phenomenon. The first one consist in a weak earnings quality before goingpublic and the next one in a low motivation of the management to keep company attractive for investors, “which can be characteristic trait of developing equity market where investor relations culture is just emerging”.
IPO firms, and the market incorporates these expectations at the time of goingpublic. Therefore, a venture backed IPO signals superior information to the market than a non-venture backed IPO. Ivanov (2004) shows that venture backed IPOs have significant higher underpricing than non- venture backed IPOs and the valuations do not change much in the long run (five years after IPO). Consistent with Brav and Gomper's (1997) findings, venture backed IPOs perform better in the long run the non-venture backed IPOs. Also, a significant portion of venture capitalists consists of corporate venture capitalists that have valuable industry expertise. When they bring companies public, the certification role played by venture capitalist may explain why investors are willing to pay more for venture backed IPOs. However, this higher undepricing represent a real cost for venture capitalists, since they rarely sell shares in the IPO. Lee and Wahal (2003) show that the difference in underpricing between venture backed and non-venture backed IPOs (6.2%-9.5%) represent a wealth transfer from venture capitalists to new shareholders. As a compensating benefit associated with incremental undepricing of venture backed IPOs, they document a positive relationship between the level of undepricing and future inflows of capital to venture capital firms. Thus, the "grandstanding" behavior documented by Gompers (1996) explains the costs that venture capitalists are willing to bear in taking their portfolio companies public. Overall, the recent empirical findings suggest that venture backed IPOs signal superior information to the market relative to non-venture backed IPOs.
This report describes findings from concurrent focus groups, which were designed to follow on from the Durrell Wildlife Park Public Participation Meeting (PPM) in October 2011. This follow-up meeting and the preceding PPM is part of the larger European Commission-funded project EU-Zoos-XXI, which saw other PPMs taking place at zoos across Europe in Portugal, Sweden and Rome. The aim of these PPMs was to engage with members of the zoo visiting public and understand the kinds of educational and engagement needs they would like to see addressed by zoos. This unique approach involves engaging publics upstream and on an on- going basis in the decision-making process, and empowering them to guide the development of the zoo’s educational provision.
With these thoughts in mind, we started writing The Wellness Syndrome. Our hope was to address public issues in a critical and reflexive way. Soon enough we had to ask: do we need organisation theory — or even social theory more generally? We weren’t quite sure. We wanted to write in a scholarly way, but avoid being subsumed by scholarly logic.