Allocations, Adverse Selection and Cascades in IPOs: Evidence from the Tel Aviv Stock Exchange

Amihud, Yakov; Hauser, Shmuel; Kirsh, Amir

doi:10.2139/ssrn.293719

Cited by 27 publications

(17 citation statements)

References 35 publications

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“…Beatty and Ritter (1986) find that issue proceeds is one of the proxies that capture ex-ante uncertainty because better established firms often make larger issues and are generally less risky than those making smaller issues. Issue size has been used as a proxy for ex-ante uncertainty in other studies as well (Amihud et al, 2002;Kiymaz, 2000;Ljungqvist, 1997;Samarakoon, 2010) and it was found to be negatively associated with IPO underpricing.…”

Section: Control Variables: Other Factors Influencing Initial Return mentioning

confidence: 99%

“…The significant negative coefficient on Ln(Proceeds) suggests less uncertainty about the value of an IPO for a company making large issues, thereby reducing the level of underpricing. Indeed, issue size has been used as a proxy for ex-ante uncertainty in other studies as well (Beatty and Ritter, 1986;Amihud et al, 2002;Kiymaz, 2000;Ljungqvist, 1997;Samarakoon, 2010) and it was found to be negatively associated with IPO underpricing. Meanwhile, venture capital (VC), retained share owner-ship (Retown), company age (Ln(1+Age)), audit quality (Audit), the nature of IPO (Mixed) and market listing (Market) have no significant impact on initial return.…”

Section: Multivariate Analysismentioning

confidence: 99%

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Earnings management and performance of French IPO companies

Djerbi¹,

Jarboui²

2013

J. Account. Taxation

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In this paper, we examine the impact of discretionary current accruals on the performance of French IPO companies. We first note income-increasing earnings management in the first year as a public company and not in the year before the IPO (Initial Public Offerings). Based on a sample of 139 French IPOs over the period 1999 to 2007, including 38 failures, we also document that companies associated with aggressive earnings management in the IPO process, tend to suffer from subsequently poor returns and to delist for performance failure after IPO. However, we find no evidence to suggest that the level of initial return is negatively related to discretionary current accruals.

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Section: Control Variables: Other Factors Influencing Initial Return mentioning

confidence: 99%

Section: Multivariate Analysismentioning

confidence: 99%

Earnings management and performance of French IPO companies

Djerbi¹,

Jarboui²

2013

J. Account. Taxation

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“…Welch (1992) developed this idea to explain why initial public offerings of equity are on average severely underpriced by issuing firms. The pricing decision for the Microsoft IPO seems to have reflected this consideration (Uttal (1986) (p. 32)), and later authors have provided supporting evidence (Amihud, Hauser, and Kirsh (2003)). …”

Section: Exploiting Herding and Cascadesmentioning

confidence: 96%

Thought and Behavior Contagion in Capital Markets

Hirshleifer

Teoh

2009

Handbook of Financial Markets: Dynamics and Evolution

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aPrevailing models of capital markets capture a limited form of social influence and information transmission, in which the beliefs and behavior of an investor affect others only through market price, information transmission and processing is simple (without thoughts and feelings), and there is no localization in the influence of an investor on others. In reality, individuals often process verbal arguments obtained in conversation or from media presentations, and observe the behavior of others. We review here evidence concerning how these activities cause beliefs and behaviors to spread, affect financial decisions, and affect market prices; and theoretical models of social influence and its effects on capital markets. Social influence is central to how information and investor sentiment are transmitted, so thought and behavior contagion should be incorporated into the theory of capital markets.

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“…Their conclusions are based on the generalization of the single-unit auctions literature to multi-unit auctions. However, as Ausubel and Cramton (1998a) have shown 2 , the uniform price auction is not the generalization of the second price auction to multi-unit auctions. Consequently, truthful bidding is not the optimal strategy, 1 Google IPO is a recent example of a uniform price aution IPO underwrited by Open IPO.…”

Section: Strategic Price Discounting and Rationing In Uniform Price Amentioning

confidence: 99%

Strategic price discounting and rationing in uniform price auctions

Bourjade

2009

Economics Letters

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Uniform price auctions admit a continuum of collusive seeming equilibria due to bidders' market power. In this paper, I modify the auction rules in allowing the seller to ration strategic bidders in order to ensure small bidders'participation. I show that many of these "bad" equilibria disappear when strategic bidders do not know small bidders' willingness to pay. Moreover, when the seller is unconstrained in the quantity she can allocate to small bidders, the unique equilibrium price is the highest that the seller could get.

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Allocations, Adverse Selection and Cascades in IPOs: Evidence from the Tel Aviv Stock Exchange

Cited by 27 publications

References 35 publications

Earnings management and performance of French IPO companies

Earnings management and performance of French IPO companies

Thought and Behavior Contagion in Capital Markets

Strategic price discounting and rationing in uniform price auctions

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