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In Australia, initial public offering (IPO) firms not satisfying profit or asset tests are permitted to list on the securities exchange with mandatory lockups (MLs) imposed on insiders' shares. We investigate whether such lockups, and the lockup periods, are associated with underpricing. We find that the incremental effect of the association between longer ML periods and higher underpricing is stronger for firms with higher insiders' equity ownership subject to MLs relative to firms with lower insiders' equity ownership subject to MLs. This suggests that the extent and length of insiders' equity ownership subject to MLs convey information regarding IPO firms' risk. We also find that good corporate governance reduces IPO underpricing for firms with MLs. It moderates the IPO underpricing for firms with higher and longer insiders' equity ownership subject to MLs. Our findings are informative for regulators in understanding how MLs can assist in allowing smaller and younger firms with inadequate financial strength and performance to publicly raise equity capital, while morally protecting investors and preserving market integrity. [ABSTRACT FROM AUTHOR]

Developing capital markets generally lack the regulatory safeguards and rich informational sources that assist investors in judging new equity issues in modern markets. Focusing on the early stage capital market in interwar Australia, we calculate the success (underpricing and percentage raised) of 786 new equity issues, comparing initial public offerings, seasoned equity offerings, and rights issues. We examine whether the use of underwriters and the choice of security (ordinary or preference shares) affected the success of the equity issue. We find that certification by underwriters had no effect on capital‐raising success once we controlled for firm‐specific factors in the multivariate regressions, while underpricing and percentage raised varied by type of shares offered to investors. [ABSTRACT FROM AUTHOR]

Using observation/reanalysis data, influences of the Interdecadal Pacific Oscillation (IPO) on the frequency of the locally amplified Ningaloo Niño (i.e., events with local air‐sea interactions playing an important role) and their mechanisms are investigated in this study. It is found that the ratio of the locally amplified Ningaloo Niño increases during the negative phase of the IPO. This is due to positive interdecadal sea surface temperature anomalies to the northwest of Australia that promote deep atmospheric convection and anomalous cyclone off the west coast of Australia through a Matsuno‐Gill response. Based on a mixed layer heat budget analysis using outputs from a regional ocean model, it is shown that an enhanced warming of anomalously thin mixed layer by the shortwave radiation contributes dominantly to the interdecadal sea surface temperature anomalies. The shallow mixed layer depth is suggested to be generated by anomalously weak winds associated with the negative IPO. Plain Language Summary: Ningaloo Niño is an anomalously warm ocean condition along the west coast of Australia and causes heat stress to marine species (e.g., coral bleaching). There are two mechanisms that give rise to the Ningaloo Niño. One is atmospheric and oceanic remote forcing, which is associated with La Niña, and the other is associated with local air‐sea interactions. A Ningaloo Niño event in which the local air‐sea interactions play an important role is called "locally amplified Ningaloo Niño." In this study, it is confirmed that the Ningaloo Niño occurs more frequently during the negative Interdecadal Pacific Oscillation (IPO) than the positive IPO. Moreover, it is revealed for the first time that the ratio of the locally amplified events increases during the negative IPO due to intensified air‐sea interaction associated with warm ocean condition to the northwest of Australia. These results and mechanisms may contribute to improve decadal prediction of the Ningaloo Niño. Key Points: Ningaloo Niño occurs more frequently during the negative phase of the Interdecadal Pacific Oscillation (IPO)The ratio of the locally amplified Ningaloo Niño increases during the negative IPOPositive interdecadal SST anomalies to the northwest of Australia during the negative IPO enhance the local air‐sea interaction [ABSTRACT FROM AUTHOR]

Purpose – A variety of papers have analyzed the underpricing of REIT IPOs or property company IPOs. The purpose of this paper is to compare the two sectors and examines differences in the underpricing of the two types of IPOs. Design/methodology/approach – An OLS regression is used to identify factors influencing the underpricing of A-REIT and property company IPOs from 1994 until 2014. Findings – This study finds that A-REIT IPOs have a significantly lower underpricing on average than Australian property company IPOs. The time taken to list appears to influence the underpricing of both A-REIT IPOs and property company IPOs, in that issues that are filled more quickly have higher underpricing but with the magnitude of the impact being less for A-REITs. The sentiment toward the stock market also appears to impact on the underpricing of A-REIT and property company IPOs again with the magnitude of the impact being less for A-REITs. Practical implications – The paper provides information to new A-REIT and property company issuers, underwriters and investors. Originality/value – The study is the first to compare and examine the differences in the underpricing of both REITs and property companies in the one country over the same time period. [ABSTRACT FROM AUTHOR]

Purpose -- Direct costs of Australian Real Estate Investment Trust (A-REIT) initial public offerings (IPOs) were last reported in the literature using data to 2004. Much has occurred since then. The purpose of this paper is to introduce and include the A-REIT IPOs over the last ten years and examine the cost and the factors influencing the percentage underwriting and percentage total direct costs by A-REITs IPOs. The study also investigates specifically whether the utilization of an underwriter (who guarantees the success of the capital raising) rather than a stockbroker (who does not guarantee such success) costs significantly more. Design/methodology/approach -- The study examines 87 A-REIT IPOs from January 1994 until December 2013. An OLS regression is performed to identify significant influencing factors on percentage underwriting costs and percentage total direct capital raising costs. Findings -- The study finds that larger capital raisings and those with large investor or institutional involvement identified in the prospectus are significant in reducing underwriting costs. The study does not find that underwritten IPOs are significantly more expensive (or cheaper) than those not underwritten. Additionally, the size of the issue, whether the firm offers stapled securities (is internally managed) and has higher net asset to issue price characteristics reduces the total cost of underwritten IPOs. Practical implications -- The paper provides information to new A-REIT issuers, underwriters and advisors broadly on new issue costs and on factors influencing the IPO issue costs. Originality/value -- The study is the first to examine the costs of A-REIT IPO capital raising data in the years prior to and following the recent global financial crisis period. Paper type Research paper [ABSTRACT FROM AUTHOR]

Investor returns in new Australian Real Estate Investment Trust (A-REIT) listings appear to have underperformed the market on average by 30% over a three-year investment period. We examine whether certain firm and market characteristics help to explain the long-term performance of A-REIT initial public offerings (IPOs). The analysis is structured to test whether those variables known to investors prior to listing (publically available in prospectuses), could help predict the abnormal long-term return performance. Additionally, models utilizing after listing variables allowed for a comparative insight into long-term performance. The findings indicate that on average, larger A-REIT IPOs appear to perform better at the one-year performance period, while stapled A-REIT IPOs (those generally involved in property development activities) appear to per form more poorly at the three-year period. On average, larger A-REIT IPOs appear to perform better at the end of first year following listing. Furthermore, the Global Financial Crisis had a clear negative effect on the long-term return of newly listed A-REITs. [ABSTRACT FROM AUTHOR]

Unlike acquiring company shareholders in Australian takeovers, but like shareholders in government initial public offerings, shareholders of companies purchasing Australian government assets earn economically and statistically significant positive abnormal returns. However, unlike privatisations via initial public offerings where all citizens are entitled to subscribe for shares, in privatisations via asset sales only acquiring company shareholders benefit from any under-pricing. This suggests the need for greater scrutiny to ensure fair pricing in privatisation via asset sales. [ABSTRACT FROM PUBLISHER]

ABSTRACT Manuscript Type: Empirical Research Question/Issue: This study examines the relevance of currently accepted best practice recommendations regarding board structure on the survival likelihood of new economy initial public offering companies. We argue that industry context determines governance outcomes. Research Findings/Insights: We study 125 Australian new economy firms listed between 1994 and 2002. Each firm is tracked until the end of 2007 for monitoring their survival. We find that board independence is associated with an increase in the likelihood of corporate survival. We also find that the benefits of board independence increase at a decreasing rate. Theoretical/Academic Implications: The standard best practice recommendation of board independence stems from the monitoring role of directors and is based on agency theory. The results from our study suggest that the recommendation regarding board independence does not work well for new economy firms. While the agency theory based model implies a monotonic relation between board independence and performance, our research suggests that the relationship is nonlinear. This variation occurs because of increased monitoring costs faced by outsiders due to higher information asymmetry and complexity of new economy firms. Our empirical results suggest that inside directors play a complementary role to outsiders in mitigating firm failure. Practitioner/Policy Implications: Our research offers insights to policy makers who are interested in setting best practice standards regarding board structure. Our research suggests that firm/industry characteristics play a crucial role in determining the optimal board structure. In firms/industries where outsiders face significantly higher information processing costs, insiders can play a valuable complementary role to outsiders in enhancing the effectiveness of the board. Thus future hard or soft regulations related to board structure should consider industry context. [ABSTRACT FROM AUTHOR]

Dimovski and Brooks (J Intern Financ Mark Inst Money 14:267-280, ) examined 358 Australian industrial and mining company initial public offerings (IPOs) from 1994 to 1999 to report that more money was left on the table by IPOs that engaged underwriters than those that did not engage underwriters. Loughran and Ritter (Autumn 5-37, ) suggested that the negative relation between underwriter reputation and underpricing has reversed in the 1990s with U.S. IPOs. The main purpose of this paper is to study the relationship between underwriter reputation and underpricing in terms of Australian IPO data. In this paper, we use 380 Australian industrial company IPOs from 1994 to 2004 to perform the empirical study. Our results suggest that more prestigious underwriters are associated with a higher level of underpricing. Other variables that are found to be significant in explaining the level of IPO underpricing are market sentiment, share options, total capital raised and underwriter options. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to jointly assess the impact of regulatory reform for corporate fundraising in Australia (CLERP Act 1999) and the relaxation of ASX admission rules in 1999, on the accuracy of management earnings forecasts in initial public offer (IPO) prospectuses. The relaxation of ASX listing rules permitted a new category of new economy firms (commitments test entities (CTEs)) to list without a prior history of profitability, while the CLERP Act (introduced in 2000) was accompanied by tighter disclosure obligations and stronger enforcement action by the corporate regulator (ASIC). Design/methodology/approach – All IPO earnings forecasts in prospectuses lodged between 1998 and 2003 are examined to assess the pre- and post-CLERP Act impact. Based on active ASIC enforcement action in the post-reform period, IPO firms are hypothesised to provide more accurate forecasts, particularly CTE firms, which are less likely to have a reasonable basis for forecasting. Research models are developed to empirically test the impact of the reforms on CTE and non-CTE IPO firms. Findings – The new regulatory environment has had a positive impact on management forecasting behaviour. In the post-CLERP Act period, the accuracy of prospectus forecasts and their revisions significantly improved and, as expected, the results are primarily driven by CTE firms. However, the majority of prospectus forecasts continue to be materially inaccurate. Originality/value – The results highlight the need to control for both the changing nature of listed firms and the level of enforcement action when examining responses to regulatory changes to corporate fundraising activities. [ABSTRACT FROM AUTHOR]

This paper explores first-day returns on infrastructure entity initial public offerings (IPOs) in Australia from 1996 to 2007. While a good deal has been written on the first-day returns of industrial and mining company IPOs and Real Estate Investment Trust IPOs, first-day returns of infrastructure entity IPOs have yet to be reported in the literature. The study uses ordinary least squares regression analysis to identify factors that might influence the percentage first-day returns theoretically available to investing subscribers and factors that might influence the aggregate amount of money left to subscribers by issuers. The study finds that first-day returns, on average, are not significantly different from zero. There is evidence, however, that suggests higher dividend yields and higher percentage direct costs of capital raising influence these first-day returns. The study also finds that infrastructure entity IPOs that seek to raise more equity capital leave less money on the table for subscribing investors. [ABSTRACT FROM AUTHOR]