Universal Banking and Conflicts of Interest: Evidence from German Initial Public Offerings

Klein, Peter G.; Zoeller, Kathrin

doi:10.2139/ssrn.269797

Cited by 12 publications

(10 citation statements)

References 36 publications

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“…This in line with our finding that prestige has negative significant effect to initial return. And according to Klein (2001) underwriter is usually compensated by a commission which is a fixed percentage of the capital raised to minimize underpricing (low initial return). Another independent variable is number of syndicates.…”

Section: Resultsmentioning

confidence: 99%

“…Capital raised is associated with prestige which can reduce underpricing in the IPO. According to Klein (2001) underwriter is usually compensated by a commission which is a fixed percentage of the capital raised to minimize underpricing, so the capital raised reflects the compensation paid to the underwriters and may also reflect the underwriter"s prestige (Ardiansyah, 2004). According to Kenourgios (2007), underwriter prestige can be a proxy using the ratio of capital which has been enhanced through the IPO process, so prestige can be measured by using the capital raised (CR) with this formula:…”

Section: Literature Reviewmentioning

confidence: 99%

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Factors from Underwriter That Influence Initial Return of The Companies Doing Initial Public Offerings in Indonesia Stock Exchange in The Period Of 2004-2011

Sugianto¹,

Wijaya²

2014

JMBI

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The objective of this study is to examine whether the underwriter's factors affect the initialreturn of the companies that were going to do Initial Public Offerings (IPO). This study uses the quantitative approach using Ordinary Least Squares (OLS) method to examine whether the underwriter's factors affect the initial return. The samples of this study are companies which are doing the IPO in Indonesia Stock Exchange in the period of 2004-2011. This study finds that the underwriter's factors have significant effect for the companies which do IPO, such as prestige, number of syndicate, experience, and oversubscription. But other independent variables like reputation, total assets, age, and price revision have no significant impact to initial return. The paper provides useful information for emitens how to choose good underwriters to avoid underpricing which causes wealth transfer to investors, the underwriters with good prestige, big syndicates, a lot of experiences, and less of doing oversubscription are recommended.

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Section: Resultsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Factors from Underwriter That Influence Initial Return of The Companies Doing Initial Public Offerings in Indonesia Stock Exchange in The Period Of 2004-2011

Sugianto¹,

Wijaya²

2014

JMBI

View full text Add to dashboard Cite

show abstract

“…This in line with our finding that prestige has negative significant effect to initial return. And according to Klein, et al [36] underwriter is usually compensated by a commission which is a fixed percentage of the capital raised to minimize underpricing (low initial return). Another independent variable is number of syndicates.…”

Section: Discussionmentioning

confidence: 99%

“…Capital raised is associated with prestige which can reduce underpricing in the IPO. According to Klein, et al [36] underwriter is usually compensated by a commission which is a fixed percentage of the capital raised to minimize underpricing, so the capital raised reflects the compensation paid to the underwriters and may also reflect the underwriter's prestige [2]. According to Kenourgios [17], underwriter prestige can be a proxy using the ratio of capital which has been enhanced through the IPO process, so prestige can be measured by using the capital raised (CR) with this formula:…”

Section: Variablesmentioning

confidence: 99%

Factors from Underwriter That Influence Initial Return of the Companies Doing Initial Public Offerings in Indonesia Stock Exchange in the Period of 2004-2011

Sugianto¹,

Wijaya²

2016

aeb

View full text Add to dashboard Cite

The objective of this study is to examine whether the underwriter's factors affect the initial return of the companies that were going to do Initial Public Offerings (IPO). This study uses the quantitative approach using Ordinary Least Squares (OLS) method to examine whether the underwriter's factors affect the initial return. The samples of this study are companies which are doing the IPO in Indonesia Stock Exchange in the period of 2004-2011. This study finds that the underwriter's factors have significant effect for the companies which do IPO, such as prestige, number of syndicate, experience, and oversubscription. But other independent variables like reputation, total assets, age, and price revision have no significant impact to initial return. The paper provides useful information for issuers how to choose good underwriters to avoid underpricing which causes wealth transfer to investors, the underwriters with good prestige, big syndicates, a lot of experiences, and less of doing oversubscription are recommended.

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“…Loughran and Ritter (2002) explore the agency conflict between issuer and underwriter and use prospect theory to explain that the greater the recent increase in issuer's wealth, the less is the bargaining effort in negotiations with the underwriter over the offer price. One answer to the question of why issuers do not choose a more efficient selling mechanism like auctions (for example, see Biais and Faugeron (2002)) is the spinning or corruption hypothesis introduced by Loughran and Ritter (2002) (see also the evidence presented in Klein and Zoeller (2003)). Additionally, Bradley and Jordan (2002) and Lowry and Schwert (2002) document results that when the overall stock market rally underwriters do not fully adjust the offer price.…”

Section: Theory and Related Researchmentioning

confidence: 99%

IPO Pricing and the Relative Importance of Investor Sentiment - Evidence from Germany

2005

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Abstract:The underpricing phenomenon of Initial Public Offerings (IPOs) has been widely studied across different stock markets around the world and has often been explained to be as a result of asymmetrically distributed information and ex-ante uncertainty. However, as Ritter and Welch (2002) argue to the contrary, these theories are unlikely to explain the persistent pattern of high initial returns during the first trading day as well as other features of the returns data. This paper add some further alternative explanations to the traditional theory while focusing on German IPOs during the 1997 to 2001 period and covering a sample of 410 firms. Using time series regressions the cyclical behaviour of the issue activity is examined and we report, using VAR analysis, that lagged underpricing and IPO volume influence the decision to go public. The cross-sectional regression analysis, using both censored and uncensored data, shows that the initial returns are mainly influenced by investor sentiment and demand, and less by ex-ante uncertainty, especially during the dot-com boom.JEL Classification: G10, G12, G24, G32 IPO Pricing and the Relative Importance of Investor SentimentEvidence from GermanyRevised Version, July 2004 Abstract:The underpricing phenomenon of Initial Public Offerings (IPOs) has been widely studied across different stock markets around the world and has often been explained to be as a result of asymmetrically distributed information and ex-ante uncertainty. However, as Ritter and Welch (2002) argue to the contrary, these theories are unlikely to explain the persistent pattern of high initial returns during the first trading day as well as other features of the returns data. This paper add some further alternative explanations to the traditional theory while focusing on German IPOs during the 1997 to 2001 period and covering a sample of 410 firms. Using time series regressions the cyclical behaviour of the issue activity is examined and we report, using VAR analysis, that lagged underpricing and IPO volume influence the decision to go public. The cross-sectional regression analysis, using both censored and uncensored data, shows that the initial returns are mainly influenced by investor sentiment and demand, and less by ex-ante uncertainty, especially during the dot-com boom JEL Classification: G10, G12, G24, G32

show abstract

Universal Banking and Conflicts of Interest: Evidence from German Initial Public Offerings

Cited by 12 publications

References 36 publications

Factors from Underwriter That Influence Initial Return of The Companies Doing Initial Public Offerings in Indonesia Stock Exchange in The Period Of 2004-2011

Factors from Underwriter That Influence Initial Return of The Companies Doing Initial Public Offerings in Indonesia Stock Exchange in The Period Of 2004-2011

Factors from Underwriter That Influence Initial Return of the Companies Doing Initial Public Offerings in Indonesia Stock Exchange in the Period of 2004-2011

IPO Pricing and the Relative Importance of Investor Sentiment - Evidence from Germany

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