The performance and the survivorship of New Zealand IPOs
ABSTRACT This paper studies the performance and the survivorship of New Zealand IPOs for the period 1991 to 2005. We find that the commonly reported features of IPOs, such as underpricing and underperformance, exist in New Zealand, with the level of underpricing declining in recent years. We find that the operating performance of companies in our sample does not change significantly after listing. Underpricing, size and operating performance are found to influence IPO market performance, while higher risk and new start-up companies have lower operating performance after listing. In relation to survivorship, the majority of delisted firms are merger and acquisition targets rather than failed firms. Interestingly, acquired firms have better market performance and have been operating longer than the surviving firms, while failed firms tend to have higher market volatility, change their management more often, and be issued in the hot market periods.
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ABSTRACT: Corporate delistings can be related to a wide variety of circumstances and operations (going private transactions, going dark strategies, mergers, buy-outs, involuntary delistings, etc.), representing a very complex and highly differentiated phenomenon, whose relevance has recently increased as one of the many effects of the ongoing global financial crisis. In this paper, on the basis of a systematic review of the existing international literature, we give reasons for the need for a wider and deeper theoretical framework for corporate delistings, which we consider to be an essential premise for the conduction of further studies on corporate governance changes and the dynamics of corporate value associated with going-private and going-dark strategies. We provide a possible classification of corporate delistings that deepens the fundamental distinction between voluntary and involuntary delistings. A particular focus is on voluntary delistings, which we differentiate in the light of three main characterising aspects: the subjects who pursue delisting, the strategic context and the operating conditions of the delisted company. We define some uniform areas of observation, which may represent a useful framework for future deeper studies concerning corporate delistings (pre-sale delistings, hidden potential delistings, control strengthening delistings and takeover delistings, either in balanced operating conditions or in presence of crisis/operating distress).Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7; 10/2013
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ABSTRACT: We provide new evidence on the impact of the ongoing deep financial crisis on the performance of IPOs. The findings indicate a continuously increasing level of underpricing as a result of the recent financial crunch. This is attributed to underwriters’ efforts to create demand and their desire to reward investors for their participation. Their actions build the ground for long-term underperformance, a conclusion supported by voluminous literature. The pre-IPO’s owner’s loyalty signals the quality and leads to compensation by less underpricing. Going public with a reputable underwriter does not pay, as it does not reduce the amount of money left on the table. Consistent with information revelation theory, a determination for listing captures the underpricing phenomenon.01/2013;