Going public abroad

Caglio, Cecilia; Hanley, Kathleen Weiss; Marietta-Westberg, Jennifer

doi:10.1016/j.jcorpfin.2016.07.004

Cited by 24 publications

(18 citation statements)

References 25 publications

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“…A growing stream of literature examines the impact of country institutions, such as legal frameworks, on the significant cross-country variation in IPO underpricing, after controlling for firm-and issuing-specific factors (Banerjee et al, 2011, Engelen and Essen, 2010, Hopp and Dreher, 2013. More recently, Doidge et al (2013) and Caglio et al (2016) show how financial integration positively supports the development of IPO markets (number and size of listings) and moderates the effect of country institutions on IPO decisions. In our paper, we combine and extend this literature by assessing how the increasing exposure of local markets to global factors reduces IPO underpricing and weakens the impact that country institutions have on the cross-country variation in IPO underpricing.…”

Section: Introductionmentioning

confidence: 99%

Market integration, country institutions and IPO underpricing

Marcato

Milcheva

Zheng

2018

Journal of Corporate Finance

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We extend the IPO literature analysing the role of financial market integration in the development of IPO markets and the pricing of newly listed stocks. Using a hierarchical linear model, we show that differences in underpricing between markets with high and low financial integration levels are economically significant and may explain the choice of location in the listing process. Firstly, market integration negatively affects the level of IPO underpricing by increasing the importance and efficiency of the financial intermediation process via tradable securities. Secondly, the presence of a deeper market integration has a moderation effect, which weakens the explanatory power of country institutions in the crosscountry variation of IPO underpricing. Finally, we suggest a hierarchical structure be assumed for the modelling of crosscountry IPO studies with heterogeneous country characteristics. Our results are robust to alternative measures of financial integration and several model specifications.

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Section: Introductionmentioning

confidence: 99%

Market integration, country institutions and IPO underpricing

Marcato

Milcheva

Zheng

2018

Journal of Corporate Finance

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“…For developments in U.S. IPOs and comparisons with non‐U.S. IPOs, see Abrahamson, Jenkinson, and Jones (), Ritter (), Caglio, Hanley, and Marietta‐Westberg (), and Doidge, Karolyi, and Stulz ().…”

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confidence: 99%

Quid Pro Quo? What Factors Influence IPO Allocations to Investors?

Jenkinson¹,

Jones²,

Suntheim

2018

The Journal of Finance

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Using data from all of the leading international investment banks on 220 initial public offerings (IPOs) raising $160 billion between January 2010 and May 2015, we test the determinants of IPO allocations. We compare investors' IPO allocations with proxies for their information production during bookbuilding and the broking (and other) revenues they generate for bookrunners. We find evidence consistent with information revelation theories. We also find strong support for the existence of a quid pro quo whereby broking revenues are a significant determinant of investors' IPO allocations and profits. The quid pro quo remains when we control for unobserved investor characteristics and investor-bank relationships. various seminar participants for their suggestions, and Nadia Chernenko for her help with the data. This research formed part of the Financial Conduct Authority's (FCA's) review of Investment and Corporate Banking, and draws upon confidential information supplied by investment banks. The FCA reviewed the paper to confirm that no confidential information relating to particular investment banks or investors has been included. The views expressed in this paper are those of the authors and not the FCA. The authors have read the Journal of Finance's disclosure policy and have no conflicts of interest to disclose.1 Laddering is the practice of allocating shares on the understanding that investors will buy additional shares in the immediate aftermarket. Spinning refers to the practice of allocating shares to corporate executives in order to influence their decisions in future corporate investment banking transactions.

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“…For instance, Pagano et al (2002Pagano et al ( , p. 2653, who study foreign listings of companies, do not separate firms that list shares on foreign exchanges as 'their first port of entry into the public equity market' from those that enter a foreign exchange 'after having already listed on their domestic exchange'. However, Caglio et al (2013) find that the determinants of the decision to go public abroad are different from the determinants of the decision to cross-list shares on an overseas exchange. Chemmanur and Fulghieri (2006) and Stulz (2009) provide theories of going public abroad, which are supported by empirical evidence in Caglio et al (2013).…”

Section: Hypotheses 21 Theoretical Backgroundmentioning

confidence: 63%

“…However, Caglio et al (2013) find that the determinants of the decision to go public abroad are different from the determinants of the decision to cross-list shares on an overseas exchange. Chemmanur and Fulghieri (2006) and Stulz (2009) provide theories of going public abroad, which are supported by empirical evidence in Caglio et al (2013). Chemmanur and Fulghieri argue that a firm is more likely to go public abroad if the investors that can value the firm at a low cost are clustered in a foreign market.…”

Section: Hypotheses 21 Theoretical Backgroundmentioning

confidence: 63%

Why do some Chinese technology firms avoid ChiNext and go public in the US?

Güçbilmez

2014

International Review of Financial Analysis

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Some Chinese technology firms prefer to go public on US exchanges despite the launch of ChiNext as a NASDAQ-style board of the Shenzhen Stock Exchange in late 2009. Conventional hypotheses based on sales internationalization and issuing costs fail to explain this preference. Instead, our findings suggest the existence of a separating equilibrium in which small but profitable firms choose ChiNext and large firms backed by foreign venture capital prefer US exchanges as their IPO location. Our findings have broader implications for entrepreneurial finance in China. Policy suggestions are offered for increasing the number of foreign VC-backed IPOs on ChiNext.

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Going public abroad

Cited by 24 publications

References 25 publications

Market integration, country institutions and IPO underpricing

Market integration, country institutions and IPO underpricing

Quid Pro Quo? What Factors Influence IPO Allocations to Investors?

Why do some Chinese technology firms avoid ChiNext and go public in the US?

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