IPO pricing: growth rates implied in offer prices

Cogliati, Giordano Maria; Paleari, Stefano; Vismara, Silvio

doi:10.1007/s10436-010-0170-6

Cited by 31 publications

(8 citation statements)

References 50 publications

(60 reference statements)

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“…It further argues that using more debt for financing decisions will degrade the value of the firms. This negative relation between debt and firm values was supported by some recent studies (Su 2004;Cogliati & Paleari 2011;Raharja 2014). They perceived that the increasing use of debt is basically an anomaly.…”

Section: Trade-off Theorysupporting

confidence: 68%

The Nonlinear Effect of Debt on Firm Performance

Raharja¹,

Mranani²

2019

JEM

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This research posits the nonlinearity model of capital structure in Indonesia by examining the rate of debt acquisition and its effect on firms' performance. It uses the total debt and earnings after tax (EAT) as proxies of firms' performance from a sample of 2,064 as listed on the Indonesian Stock Exchange (IDX) from 1999 to 2018. To analyse the nonlinear effect, it uses the polynomial regression analysis. The results established the positive quadratic impact of debt on firms' performance which predicts that increasing debt will trigger such high performance. It is conceived that increasing debt use in financing decisions will cause the company performance to go down in the future. This research provides a new perspective to the field of capital structure theory, especially to the classical trade-off theory. For future research, introducing other proxies in gauging firms' performance may strengthen the validity of this study. It should also explain and elaborate on the nexus between debt increment and positive quadratic effect on firms' performance, and also provide solutions to practical issues in the economy.

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Section: Trade-off Theorysupporting

confidence: 68%

The Nonlinear Effect of Debt on Firm Performance

Raharja¹,

Mranani²

2019

JEM

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“…An offer with a larger fraction of newly issued shares signals a higher commitment by existing shareholders . Related to the characteristics of the offer, we control for the reputation of the underwriter and for the market momentum, defined as the FTSE Euromid percentage index return calculated over the 6 months before the offer date (Cogliati, Paleari, & Vismara, ).…”

Section: Sample Data and Modelmentioning

confidence: 99%

Board Independence, Ownership Structure and the Valuation of IPOs in Continental Europe

Bertoni¹,

Meoli²,

Vismara³

2014

Corporate Governance

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121

105

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Manuscript Type Empirical Research Question/Issue We combine the value‐creation and value‐protection views of the board of directors to study the impact of board independence (BI) on the value of the firm at the time of its initial public offering (IPO). Research Findings/Insights We conduct our analysis on a sample of 969 firms that went public in France, Germany, and Italy between 1995 and 2011. We show that BI is a critical factor in the valuation of IPO firms. Our results support both the value‐creation and value‐protection roles of the board of directors. The relative importance of the two roles of the board varies over time, with value‐creation (value‐protection) dominating in IPOs of young (mature) companies. Theoretical/Academic Implications Our theoretical framework combines the agency and resource‐dependence theories. The impact of BI on IPO valuation depends on the importance of the value‐creation and value‐protection roles played by the board. The change in the relative importance of the two roles determines a U‐shaped relationship between BI and firm age. Corporate governance is particularly important for young and innovative firms (where the resource‐dependence theory applies, and governance acts as a value‐creation device), as well as for mature firms and for companies where ownership and control are separated (where the agency theory applies, and governance serves as a value‐protection mechanism for minority shareholders). Practitioner/Policy Implications We show that corporate governance is a significant factor affecting the valuation of an IPO company. The importance of BI varies substantially with the knowledge intensity of the industry, the separation between ownership and control, and the age of the listing company.

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“…(Bonaventura & Giudici, 2016) analyzed the valuation approaches for the Italian companies during the period 2000-2009, and found the discounted cash flow method as the most widely used valuation techniques. Similarly, (Cogliati, Paleari, & Vismara, 2011) have also identified the popularity of DCF method among the IPOs.…”

Section: 5) Theme: 5 Valuation and Initial Public Offering (Ipo)mentioning

confidence: 96%

Valuation of Equity Securities, Private Firms, and Startups

Ali¹,

Khalidi²

2020

IBTJBS

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For valuation of equity securities and similar objects research has not been rigorous and holistic. This paper is an attempt to review the literature on valuation of equity for a variety of types of entities, and within some important valuation contexts. The review was performed for such themes as (1) Valuation of Stocks (2) Valuation of Private Firms (3) Valuation of Startups (4) Valuation in Emerging Markets (5) Valuation and IPO. The review found that there is a consensus over various models for their usefulness and theoretical soundness, at the same time researchers and practitioner are seeking better models, particularly in the areas of private firm valuation and startups. The valuation of stock has more robust and recognized framework as compared to private firms and startups. The valuation of private firms is more complex because of closed nature of the firm. The valuation of startup is complicated because of the newness of the business and industry, and also because of the nature of the business structure. In general, the practices involving valuation of equity securities and other similar entities have evolved and improved over time. This research will enable the security analysts and other valuation experts to gain insights into various models and their inputs for their beneficial applications.

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IPO pricing: growth rates implied in offer prices

Abstract: Initial public offerings, DCF model, Valuation, Growth rates, G00, G30,

Cited by 31 publications

References 50 publications

The Nonlinear Effect of Debt on Firm Performance

The Nonlinear Effect of Debt on Firm Performance

Board Independence, Ownership Structure and the Valuation of IPOs in Continental Europe

Valuation of Equity Securities, Private Firms, and Startups

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