Underpricing, Long-Run Performance, and Valuation of Initial Public Offerings

Fabian Braemisch

ISBN 10: 363160405X / ISBN 13: 9783631604052

Published by Peter Lang, Peter Lang Mär 2011, 2011

About this Item

Neuware -This thesis empirically analyses three individual research questions around initial day returns, long-run performance and valuation of initial public offerings of European Property Companies. The first question examines whether IPO signals such as underpricing reveal proprietary information about the prospects of an issuing firm¿s underlying industry such as the performance of direct real estate investments. The results in fact show a positive relation between underpricing and average property yields of the issuing companies¿ target investment area twelve months after the IPO. The second question tries to rationalise why previous real estate IPO studies document no long-run underperformance, a phenomenon commonly observed for industrial issuings. It could be shown that with a decreasing degree of the transparency of the underlying real estate markets, investor over-optimism is more likely to develop which is assumed to be one of the main factors for IPO firms to perform worse in the long run than established firms. The last research question sheds further light on the contradicting evidence found for the impact of corporate governance on valuation. Main findings show that concentrated ownership, both inside and outside, negatively affects IPO valuation while higher debt levels have a positive impact, implying that the market favorably recognises the existence of control mechanisms. 156 pp. Englisch.

Seller Inventory # 9783631604052

Bibliographic Details

• Title: Underpricing, Long-Run Performance, and Valuation of Initial Public Offerings
• Publisher: Peter Lang, Peter Lang Mär 2011
• Publication Date: 2011
• Language: English
• ISBN 10: 363160405X
• ISBN 13: 9783631604052
• Binding: Buch
• Condition: Neu
• Dimensions: 216W x 153H x 12D millimeters 216 millimeters width by 153 millimeters height by 12 millimeters depth
• Weight: 323 grams

About this title

Synopsis

This thesis empirically analyses three individual research questions around initial day returns, long-run performance and valuation of initial public offerings of European Property Companies. The first question examines whether IPO signals such as underpricing reveal proprietary information about the prospects of an issuing firm’s underlying industry such as the performance of direct real estate investments. The results in fact show a positive relation between underpricing and average property yields of the issuing companies’ target investment area twelve months after the IPO. The second question tries to rationalise why previous real estate IPO studies document no long-run underperformance, a phenomenon commonly observed for industrial issuings. It could be shown that with a decreasing degree of the transparency of the underlying real estate markets, investor over-optimism is more likely to develop which is assumed to be one of the main factors for IPO firms to perform worse in the long run than established firms. The last research question sheds further light on the contradicting evidence found for the impact of corporate governance on valuation. Main findings show that concentrated ownership, both inside and outside, negatively affects IPO valuation while higher debt levels have a positive impact, implying that the market favorably recognises the existence of control mechanisms.

About the Author

Fabian Braemisch was until 2009 research and teaching assistant at the European Business School (EBS) in Oestrich-Winkel (Germany). He finalised his doctoral thesis at EBS. His research interests focus on IPO performance and on related equity capital market transactions. Today he is working for a leading global investment bank in London.