IPO Survival in a Reputational Market

Espenlaub, Susanne; Khurshed, Arif; Mohamed, Abdulkadir

doi:10.1111/j.1468-5957.2012.02280.x

Cited by 132 publications

(134 citation statements)

References 48 publications

(109 reference statements)

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“…The reason is because NASDAQ is the first true second board, AIM is considered by many as one of the most successful second boards, and GEM was set up to mainly attract mainland Chinese firms. (Espenlaub et al, 2012). Therefore, some attribute the success of AIM to its lack of regulation.…”

Section: Chinext Compared With Other Major Second Boardsmentioning

confidence: 99%

“…Other studies tend to focus on a single second board. For the second board in the UK, the Alternative Investment Market (AIM), Espenlaub, Khurshed, and Mohamed (2012) examine the survival rate of IPOs on AIM. Gerakos, Lang, and Maffett (2011) study the post-listing returns, liquidity, information asymmetry, and survival rates for firms listed on AIM.…”

Section: Introductionmentioning

confidence: 99%

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An Empirical Study of China’s Second Board

Chen¹,

Yang²

2013

IJEF

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In this paper we conduct a comprehensive study on China's second board, ChiNext. We compare ChiNext against other major second boards in the world to assess its performance in attracting new listings and facilitating capital raising. We find that it has fared very well in these aspects. We examine the firm characteristics, pre-IPO operating performance, and governance practices and ownership structures for 355 ChiNext firms. We find that these are young and small firms that are profitable and experiencing high growth. They generally adopt good governance practices. Their ownership remains to be highly concentrated after their IPOs. We explore the determinants of IPO underpricing and find that IPOs of larger and more profitable firms are less underpriced, while those of firms with high volatility are more underpriced. IPOs conducted in a hot IPO market are less underpriced. In addition, investors may perceive the length of the time interval between the IPO issue date and the listing date on ChiNext as a signal of firm quality: the longer it takes a firm to list its IPO shares on ChiNext, the more its shares are underpriced. Our paper contributes to the IPO literature, provides insight into Chinese private enterprises, and sheds light on factors affecting the success of a second board.

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Section: Chinext Compared With Other Major Second Boardsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

An Empirical Study of China’s Second Board

Chen¹,

Yang²

2013

IJEF

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“…We use Migliorati and Vismara (2014) ranking of AIM underwriters which is based on the market share of the underwriter using gross proceeds. 10 In addition to this measure, we also include a reputational measure based on the underwriter's credit score (Espenlaub et al 2012). To control for the market environment around the time of the IPO, we use the volatility of the FTSE AIM All Share Index during the two months prior to the IPO.…”

Section: Methodsmentioning

confidence: 99%

Warrants in underwritten IPOs: The Alternative Investment Market (AIM) experience

Khurshed

Kostas

Saadouni

2016

Journal of Corporate Finance

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We examine the use of warrants as a part of underwriter compensation in IPOs listed on the Alternative Investment Market (AIM) of the London Stock Exchange. Our results show that, though warrant-issuing IPO firms are riskier, they are usually underwritten by reputable underwriters. Firms that are cash constrained at the time of their IPO are more likely to use warrants. Both market volatility and hot issue markets increase the likelihood of firms issuing warrants. We also find that warrant issuers are able to minimise their total costs of going public, even under a very light regulatory setting with regards non-cash compensation. They incur actual costs of 29.1%, but would have incurred greater costs of 33.8% had they not issued warrants to their underwriters. Overall, our results support the cost minimisation explanation of the use of warrants by UK IPO firms.

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“…Simon (1989) investigates 5-year failure rates for IPOs carried out on the NYSE and other less well regulated US stock exchanges before and after the 1933 Securities Act and finds that while only a tiny proportion of NYSE IPOs failed both before and after reform, the failure rate for non-NYSE IPOs did drop substantially immediately after federal regulation was introduced. In contrast, Espenlaub, Khurshed and Mohamed (2011) report that IPO survival rates on AIM, the "junior" market of the LSE renowned for a flexible regulatory approach, are broadly similar to survival rates on more heavily regulated US stock markets.…”

mentioning

confidence: 90%