Signalling and the Valuation of Unseasoned New Issues Revisited

Krinsky, Itzhak; Rotenberg, Wendy

doi:10.2307/2330775

Cited by 62 publications

(30 citation statements)

References 15 publications

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“…Standard finance theory asserts that investors use issuer's characteristics such as profitability, level of risk and the extent of asymmetric information to evaluate the firm's value (Myers and Majluf, 1984;Koop and Li, 2001). Ritter (1984) and Krinsky and Rotenberg (1989) report a positive relation between accounting data prior to issuance and IPO firm value. Kim et al (1995); Koop and Li (2001) and Chen et al (2002) all document the connection of the EPS and IPO firm value.…”

Section: Stochastic Frontier Modelmentioning

confidence: 99%

IPO underpricing and flotation methods in Taiwan – a stochastic frontier approach

Peng

Wang

2007

Applied Economics

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Adopting stochastic frontier analysis, this article studies the pricing model and underpricing phenomenon of the initial public offerings (IPOs) in Taiwan and further elucidates the potential impact of offering mechanisms on underpricing. The sampling period is from 1996 to 2003, in which 647 IPOs are selected. Empirical results suggest that issuing firms with greater earning potentials, less risk or less asymmetric information have lower underpricing. Furthermore, the variables included to explain underpricing are mostly significant, especially the proxy variable for flotation method. Observed mean IPO underpricing is 20.59% in the sample period, compared to 17.12% for the subgroup using the auction method. This statistically significant difference implies that the introduction of the auction method can help reduce IPO underpricing.

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Section: Stochastic Frontier Modelmentioning

confidence: 99%

IPO underpricing and flotation methods in Taiwan – a stochastic frontier approach

Peng

Wang

2007

Applied Economics

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“…Equity retained is the proportion of equity retained by pre-issue shareholders at flotation (RET). Downes and Heinkel's (1982) and Krinsky and Rotenberg's (1989) …”

Section: Actions Taken In Ipos By Ownersmentioning

confidence: 99%

“…ALPHA # : RET þ ln(1 À RET), where RET is the proportion of equity retained by preissue shareholders immediately after flotation (Downes and Heinkel, 1982;Krinsky and Rotenberg, 1989). # indicates use of natural logarithm.…”

Section: Smentioning

confidence: 99%

“…The second column in the table indicates the expected sign of the coefficient suggested by previous studies. The expected sign for a 1 , the coefficient on the ALPHA variable deserves comment (Downes and Heinkel, 1982;Krinsky and Rotenberg, 1989). ALPHA is designed to reflect the proportion of equity retained by pre-flotation owners.…”

mentioning

confidence: 99%

“…At first sight, high retentions seem to be a positive signal, and hence suggest a positive coefficient. However, the ALPHA variable, used here for consistency with earlier studies (Downes and Heinkel, 1982;Krinsky and Rotenberg, 1989), is a non-linear function of the proportion of equity retained. ALPHA becomes increasingly negative as the proportion of equity retained increases.…”

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confidence: 99%

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Firm resources and quality signalling: evidence from UK initial public offerings

Reber

Berry

Toms

2005

Applied Financial Economics

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This study examines the relative importance of financial structure, advisers' reputations, and managerial experience on the market value achieved by an initial public offering (IPO). A sample of 172 UK IPOs on the Official list of the London Stock Exchange during the period 1992-1996 indicates that the extent to which existing owners keep a stake in the business, and managerial expertise at board level, have a significant impact on the performance of the IPO. Advisers' reputations appear to be irrelevant. The findings are comparable to recent studies that cover a similar sample period.

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