Initial Public Offerings in Hot and Cold Markets

Helwege, Jean; Liang, Nellie

doi:10.1017/s0022109000004026

Cited by 323 publications

(108 citation statements)

References 58 publications

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“…The initial return of IPOs listed in hot periods is expected to be higher than the one of IPOs listed in cold periods (Ritter, 1984;Helwege and Liang, 2002).…”

Section: Hypotheses Developmentmentioning

confidence: 98%

IPO underpricing and aftermarket performance in Italy

Dell’Acqua

Etro

Tetia

et al. 2015

JEFS

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We analyse a sample of 129 Initial Public Offerings (IPOs) on the Italian Stock Exchange from January 2001 to December 2012. Results confirm the presence of underpricing in two thirds of the sample offerings but with an average level of 6.75% that is far below previous studies. Moreover we provide detailed temporal insights to show that the phenomenon is timevarying, albeit our sample does not show a positive correlation with hot market periods only. The average stock performance 30 days after the listing is lower than average first day return, evidence that is mainly explained by temporary actions of price support by underwriters. Finally, through a series of multivariate regression analyses we find that various factors exercise an influence on the IPO underpricing level, specifically: firm size, aftermarket risk, market demand, financial crisis and shares retention by existing shareholders.

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“…The initial return of IPOs listed in hot periods is expected to be higher than the one of IPOs listed in cold periods (Ritter, 1984;Helwege and Liang, 2002).…”

Section: Hypotheses Developmentmentioning

confidence: 98%

IPO underpricing and aftermarket performance in Italy

Dell’Acqua

Etro

Tetia

et al. 2015

JEFS

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“…6 In reference to the common concept of a hot market (e.g., Helwege and Liang, 2004), we identify the state of the current market by ranking three-month moving averages of scaled equity issue volumes. The scaled issue volume is the aggregate equity issue volume divided by the month-end value of outstanding equity for the London Stock Exchange.…”

Section: Key Measure Constructsmentioning

confidence: 99%

Ownership, capital structure and financing decision: Evidence from the UK

Sun

Ding

Guo

et al. 2016

The British Accounting Review

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(2016) 'Ownership, capital structure and nancing decision : evidence from the UK.', British accounting review., 48 (4). pp. 448-463. Further information on publisher's website:https://doi.org/10.1016/j.bar.2015.04.001Publisher's copyright statement: NOTICE: this is the author's version of a work that was accepted for publication in The British Accounting Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be re ected in this document. Changes may have been made to this work since it was submitted for publication. A de nitive version was subsequently published in The British Accounting Review, Volume 48, Issue 4, December 2016, 10.1016/j.bar.2015.04.001. Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-pro t purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. show a non-monotonic relation between MSO and the debt ratio, supporting two competing theories: interest alignment theory and the management entrenchment hypothesis. Nevertheless, institutional ownership is found to be positively related to firm leverage levels. Our results further suggest that firms with concentrated MSO decrease their leverage by increasing the probability of issuing equity over bonds, an effect strengthened during hot market periods.

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“…during high-valuation periods. Helwege and Liang (1996) argue that shareholder reaction to a corporate announcement can be affected by investor sentiment, i.e. the reaction of investors to factors other than the value created by the event.…”

Section: Introductionmentioning

confidence: 99%

“…Thus, we investigate whether market-wide high valuation periods influence reactions to merger announcements. This 5 Helwege and Liang (1996) The rest of the paper is organized as follows: Section 2 classifies the markets into high-, neutral-and low-valuation periods and describes the data, model development and methodologies. Section 3 presents and interprets the empirical results.…”

Section: Introductionmentioning

confidence: 99%

Merger momentum and market valuations: the UK evidence

Antoniou

Guo

Petmezas

2008

Applied Financial Economics

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This study examines the effect of merger momentum on acquirer's returns both in the shortand long-run. The focus is on high-valuation markets and the source of momentum is investigated employing three different hypotheses: the neoclassical hypothesis, the hubris hypothesis and the investor sentiment theory. The neoclassical theory predicts increase in value with no long term reversals and hubris hypothesis suggests destruction of value in both short and long-run due to managerial overconfidence. However, our results support the investor sentiment (optimism) hypothesis since investors are found to earn significant gains in the shortrun but returns are reversed in the long-run as initial expectations may not be fully met when combined firms' accomplishments become known over time. The results are robust after controlling for several acquirer and deal characteristics. JEL Classification: G14; G34.

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Initial Public Offerings in Hot and Cold Markets

Cited by 323 publications

References 58 publications

IPO underpricing and aftermarket performance in Italy

IPO underpricing and aftermarket performance in Italy

Ownership, capital structure and financing decision: Evidence from the UK

Merger momentum and market valuations: the UK evidence

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