IPO Valuation and IPO Inter-Industry Effects

Abstract

This study examines the valuation effects of initial public offerings (IPOs) and intra-industry effects of IPOs in Turkey between 2010 and 2018. The purpose of this study is to find out whether initial public offerings are overvalued and whether they impact the pricing of industry peers. First, the valuation of IPOs is investigated. Price-to-value ratios of Turkish IPOs are compared with sector average ratios to determine whether IPOs are overvalued. Turkish IPOs are not overvalued against industry rivals' price-to-value ratios based on sales and earnings-before-interest-taxes-depreciation-and-amortization (EBITDA) and earnings. Similarly, valuation based on price-to-value ratios is not related to initial pricing of IPOs. Second, the intra-industry effects of IPOs are investigated. Sector-adjusted abnormal returns of IPOs are compared to marketadjusted abnormal returns. The results are not affirmative: There is no statistically significant difference between the two abnormal returns. Turkish IPOs do trigger significant price declines on rival companies' stocks. Altogether, the findings indicate that there is neither overvaluation of IPOs nor intraindustry effects over rival companies. Companies do not time the market based on industrial overvaluation. This may indicate market efficiency or lack of competition in the IPO market.

The Analysis of Volvo's Initial Public Offering

“…All in all, all four of these challenges are driving Volvo Cars to make the transition from fuel cars to electric vehicles, so Volvo needs the money, and the best way for them is to go IPO in the special period to raise money [3].…”

İlk Halka Arzların BİST100 Endeksi Volatilitesine Etkisi: Covid-19 Pandemisi Dönemi

“…Bu sonuçlar doğrultusunda BİST'in yarı-etkin formda bir piyasa olmadığı belirlenmiştir. Benzer bir dönem olarak 2010-2018 dönemindeki ilk halka arzlarda yüksek değerlemeyi ve ilk halka arzların aynı sektörde faaliyet gösteren diğer halka açık şirketlere etkisini inceleyen Avcı (2021), ise çalışmanın sonuçlarına göre halka ilk defa arz edilen hisse senetlerinde yüksek fiyatlama olgusunun olmadığı ve halka açık olan diğer şirketlere bir etkisinin olmadığı sonucuna varılmıştır. Literatürde ilk halka arzların oynaklığa etkisini modelleyen çalışmalar yer almamakla birlikte, oynaklığı modelleyen çok sayıda çalışma vardır.…”

Determinants of Ipo Oversubscription on Islamic Stocks: Evidence From Indonesia

“…In the literature, factors that cause the oversubscription in the IPOs have received substantial attention (Avci, 2021;Dong et al, 2021;Gupta, Singh, & Yadav, 2022;Hoque & Mu, 2021;Payne, Trudell, Moore, Petrenko, & Hayes, 2022). These include investor demand (Arora & Singh, 2020;Mensi, Lee, Vinh Vo, & Yoon, 2021); promotional activities (Arora & Singh, 2020;Lan & Khoi Thach, 2022); previous number of IPO's conducted in the country (Lan & Khoi Thach, 2022;Mehmood, Mohd-Rashid, Ong, & Abbas, 2021); prior information about the company making the IPO (Chowdhry & Sherman, 1996;Hayat & Hassan, 2017), level of market efficiency (Avci, 2021;Karnatak, Malik, & Udayan Karnatak, 2021;Mehmood et al, 2021); role of the regulator (Arora & Singh, 2020;Dong et al, 2021); market capitalization (Arora & Singh, 2020;Lan & Khoi Thach, 2022); economic performance of the country (Arora & Singh, 2020;Mehmood et al, 2021); monetary policies of the country (Adra, 2021;Arora & Singh, 2020;Tekatli, 2021); investor perception about the IPO and the market (Gupta et al, 2022;Lan & Khoi Thach, 2022;Mehmood et al, 2021) and performance of previous IPOs of the company, its peers and other companies amongst the others (Agarwal, Liu, & Rhee, 2008;Badru & Ahmad-Zaluki, 2018;Lan & Khoi Thach, 2022;Tajuddin, Mohd-Rashid,...…”