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Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Using an international sample of IPO firms and two country-level measures of financial literacy, we find strong evidence that financial literacy is negatively associated with IPO underpricing. In cross-sectional analyses, we find that the effect of financial literacy in reducing IPO underpricing is more pronounced when the information environment is less transparent. Employing path analysis, we document that information friction, firm transparency, and stock market participation are mechanisms that mediate this relationship. Our study contributes to and extends the literature by providing strong evidence that citizens' financial literacy has an important and consistent influence on IPO underpricing. [ABSTRACT FROM AUTHOR]

A short squeeze occurs if borrowed shares are recalled and the short seller is unable to find another source of shares. This forces the short seller to terminate a position early. For most stocks, the probability of a short squeeze is very low. Short squeezes, however, are not unusual for the hardest to borrow stocks. For these stocks, trading costs from squeezes are high and have a significant impact on the returns to short selling. For hard-to-borrow stocks, short sellers also miss out on significant abnormal returns because squeezes force them to close positions. [ABSTRACT FROM AUTHOR]

This article provides a survey of China's initial public offering (IPO) market, focusing on IPO pricing, bids and allocation, and aftermarket trading. We show that strict regulations result in suppressed IPO offer prices and high initial returns, causing a high cost of going public. Investors treat IPOs as lotteries with extremely high short-term returns, with little attention to the long term. The auction selling method, however, works in the way it is supposed to. Mutual funds bid in a more informative way than other investors, and their advantages are unlikely to be due to underwriters' preferential treatment. We also discuss the latest registration-system reform. [ABSTRACT FROM AUTHOR]

We demonstrate that investors in initial public offering (IPO) firms value revenues and that the number of U.S. Securities and Exchange Commission (SEC) revenue recognition comment letters issued on the S-1 registration statement are positively associated with reported revenues. We also find that IPO managers report revenues opportunistically in the fiscal year just prior to the offer. In additional analysis, we find that discretionary revenues are associated with significantly higher first day IPO stock returns but significantly lower 1 year stock returns. Our results are consistent with the incentives of managers to report revenues opportunistically outweighing the higher monitoring and regulatory scrutiny pre-IPO. [ABSTRACT FROM AUTHOR]

Going public by merging with a Special Purpose Acquisition Company (SPAC) is much more expensive than conducting a traditional IPO. We rationalize why some companies merge with a SPAC by listing the potential benefits. We analyze the agency problems that certain SPAC features address. SPAC IPO investors and deal sponsors have earned remarkably high annualized average returns, although we warn that recent deals are likely to disappoint. Public investors in the merged companies have earned very low market-adjusted returns on an equally weighted basis, although high redemptions on the worst deals have limited the amount of money that they lost. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

At the time of an initial public offering (IPO), firms seek to maximize their stock market value. The authors theorize and show that a firm's innovation potential—firm outputs and activities that contribute to the development of future new products—can be used by the managers of IPO firms as a credible signal of the quality of the firm. Using a sample of 370 IPO firms from the consumer-packaged goods and pharmaceutical industries, and three metrics of innovation potential, the authors show that firms' innovation potential is (1) positively associated with the initial value of the IPO and with the first-day IPO returns and (2) negatively associated with the extent to which insiders sell their shares at the time of the IPO. The effectiveness of the three metrics of innovation potential as a signal of firm quality varies: patents have a stronger impact on insider sales than preannouncements and generic references to future innovation, while preannouncements have the strongest impact on first-day IPO returns. The article presents a nuanced view of the extent to which various firm stakeholders consider information about firms' innovation potential to be a credible signal that reduces the adverse selection present in IPO deals with insider sales. [ABSTRACT FROM AUTHOR]

In the past two decades, there has been a decline in the use of uniform-price auctions in favor of fixed prices in markets of peer-to-peer lending, equity crowdfunding, and initial public offerings. This article aims to analytically study why this trend might be occurring. The analysis reveals that, relative to a fixed price, a uniform-price auction leads to more herding and strategic delay of bid submission and, consequently, a smaller transaction completion probability and lower expected revenue. These predictions are consistent with the empirical regularities observed for the bidding behavior and funding outcomes on Prosper, one of the leading peer-to-peer online lending platforms, and those documented in the literature for markets of equity crowdfunding and initial public offerings. [ABSTRACT FROM AUTHOR]

The shipping industry transports nearly 80% of the goods worldwide and requires large funding. The shipping industry shifted from debt to equity as the source of funding in the last decade. Because most shipping companies already had their initial public offering before 2013, these companies tend to engage in follow-on equity offerings (FPO). However, the challenge faced by the shipping companies is the lack of knowledge on successful FPO. The purpose of this study is to identify the most influential factors affecting shipping companies’ FPO from the investor perspective. This research applies a hybrid multiple-criteria decision-making model integrating the fuzzy-Delphi method and Decision-Making Trial and Evaluation Laboratory, processing survey responses covering four dimensions and 16 criteria from 33 investment experts. The results show that financial indicator is the primary cause affecting offering condition, technical indicators. An increase in earnings per share would help the financial performance of the shipping companies to appear most attractive to investors. [ABSTRACT FROM AUTHOR]

The study examines the level of awareness among the investors about startup IPOs and analyses the relationship between independent variables such as size and purpose of IPO, company profile, financial performance, quality management and sector performance and investment decision in startup IPO which is the dependent variable. The research is conducted majorly using primary data collected from 360 two respondents across the state of Karnataka. The data so collected is analysed using the SPSS software. The statistical tools like multiple regression analysis and correlation analysis are used to analyse the data and hypothesis are tested using ANOVA. Five hypotheses were framed and tested to verify the effect of five independent variables on dependent variable. The outcome of the study reveals that, majority of the investors have awareness about the startup IPOs and size and purpose of IPO, company profile, financial performance, quality management and sector performance have positive relationship with dependent variable and these factors have highly considerable impact on investment decision in startup IPO in Indian stock market. This study concludes that 96.1% of the investment decision in startup IPO is influenced by the sector performance, financial performance, size & purpose of IPO, quality management and company profile. [ABSTRACT FROM AUTHOR]

This research paper shed light on how small cap companies acquire funds. It focuses on a new trend available for small companies and for private investors instead of an old option or traditional way of Initial Public Offerings (IPOs) to raise money. The study focuses on changes happening. It justifies it for different reasons like new technology, too many rules for Initial Public Offerings, uncertain stock markets, wanting more control over their business, and thinking about growing for a long time. To understand these reasons better, the research referred to information from financial reports, academic studies, and market analysis. It focuses on small companies and private investors in India. The study suggests that small companies are now looking at other trending options to acquire money, like crowdfunding platforms and Special Purpose Acquisition Companies (SPACs), instead of just doing Initial Public Offerings. These alternatives have different advantages for the small cap companies like fewer rules to follow, more control over their business, and a focus on long-term growth. The research study focused on new trends or patterns of raising funds for companies like direct listings and using SPACs instead of Initial Public Offerings In nutshell this research helps us to know how small companies are changing their way of acquiring money. It gives insights that can help entrepreneurs, investors, and financial experts make better decisions in today's complex financial world. [ABSTRACT FROM AUTHOR]

This paper examines the impact of trade secret laws on the underpricing of initial public offerings (IPOs) in the United States, where we focus on the Uniform Trade Secret Act and/or the inevitable disclosure doctrine. Given that trade secret laws help firms protect their know-how in the form of trade secrets, we propose that trade secrets protected by these laws may result in increased corporate opacity, leading to greater IPO underpricing. Empirically, the average first-day returns of IPOs in states with trade secret laws are 12.7% higher than those in states without such laws. Using the information disclosed in the 10-K report on whether the firm owns trade secrets, we suggest that the existence of trade secret laws enhances the protection effect of firm maintenance of trade secrets, which leads to greater IPO underpricing. Further analyses show that the effect of trade secret laws is reinforced for IPO firms operating in complex industries, IPO firms with R&D investments, and large IPO firms, suggesting that trade secret laws increase the difficulties investors face in assessing the intrinsic value of such firms. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to review, discuss and synthesize the literature focusing on the Indian initial public offering (IPO) market. Understanding the Indian IPO market can help answer broader corporate finance questions. The growing number of IPOs in the Indian context, coupled with the increasing importance of the Indian economy in the global market, makes this review an essential topic. Design/methodology/approach: The systematic literature review methodology was adopted to review 111 papers published between 2002 and 2021. The authors used the Preferred Reporting Items for Systematic Reviews and Meta-Analyses approach during the review process. Additionally, the authors use a bibliometric review methodology to examine the pattern and trend of research in this area of interest. Furthermore, the authors conduct a critical review and synthesis of the top 20 papers based on citations. The authors also use a co-citation network and manual content analysis method to identify key research themes. Findings: This review helps in identifying major themes of research in this area of interest. The authors find that majority of the research has focused on IPO performance whereas post-IPO performance needs critical attention as well. The authors develop a comprehensive framework and future research agenda based on their discussion. Research limitations/implications: Meta-analysis of the literature can be conducted to gain better insights into the findings of prior studies. Practical implications: This review paper develops a comprehensive overview on Indian IPO market which can be of interest not only to Indian scholarship. India as an economy is increasingly gaining attention at the global level. Hence, the future research objectives as illustrated in the study can be of interest for the global scholarship also. Originality/value: To the best of the authors' knowledge, this is the first comprehensive review paper that examines, synthesizes and outlines the future research agenda on Indian IPO studies. This review can be useful for researchers, business policymakers, finance professionals and anyone else interested in the Indian IPO market. [ABSTRACT FROM AUTHOR]

This study looked at the asymmetric (nonlinear) links between Pakistan's environmental pollution, trade balance, human development index, foreign direct investment, natural resource rent, and IPO variability. The research used an annual data set from 1992 to 2019 and applied a unique co-integrating method known as asymmetric ARDL co-integration approach. The macroeconomic variables of environmental pollution, trade balance, human development index, foreign direct investment, and natural resource rent were found to have significant influences on IPO variability in both long-run and short-run asymmetric impacts. These findings highlight the important roles of the used variables in increasing IPO variability. This research suggests that Pakistan's weak macroeconomic conditions reflect the country's inadequate capital market growth. The country's lower IPO variability indicates a lack of trust among potential issuers and investors as a result of Pakistan's weak macroeconomic indices. The determined asymmetric results may be valuable for Pakistan's policymaking and stock market forecasting. Ignoring fundamental asymmetries may lead to misrepresentations of the implications. [ABSTRACT FROM AUTHOR]

An initial coin offering (ICO) seeks to raise initial investments for companies by selling crypto tokens to individuals interested in crowdfunding. As ICOs have gained popularity, a lack of information regarding startup companies' prior financial status and business health has led to information asymmetry between potential investors and ICO projects. This study explores the informational cues necessary to bridge this gap. Employing signaling theory, we elucidate the presence of information asymmetry and conduct two case analyses to identify relevant informational cues. Twitter data from two ICO projects (Stratis and NEO), which achieved the highest return on investment at the time of data collection, are extracted and analyzed to identify informational themes. Our findings reveal multiple and distinctive themes of informational cues for each ICO project, demonstrating that transmitted signals vary across different stages and are generated by both the coin publisher and the public. This research illuminates the flow of informational cues between ICO initiators and potential investors on social media. By analyzing online communication threads using qualitative methods, this study significantly contributes to the understanding of information asymmetry in the context of ICOs. [ABSTRACT FROM AUTHOR]

This study explores the relationship between economic, social, and governance (ESG) activities and initial public offering (IPO) price stabilisation actions using IPOs listed on the Hong Kong stock exchange between 2004 and 2021 as samples. We find that IPO issuers that actively conduct ESG activities have higher ESG scores, which enhances price stabilisation. Furthermore, ex‐ante volatility serves as a potential channel through which ESG activities affect price stabilisation. Providing ethical and economic implications for companies, policymakers, and investors, our findings suggest that ESG activities are vital drivers of price stabilisation. [ABSTRACT FROM AUTHOR]

We unravel the conditions under which the type of education found among board members mitigates the uncertainty in new equity markets. Our results indicate that issuers in low R&D industries—as well as those faced with complex organizational structures—leave less money on the table when their boards are dominated by executives with managerial skills. Conversely, boards with highly specialized members in small and knowledge‐intensive firms reduce underpricing. Finally, we document that both types of board education lessen initial public offering share–price volatility in the immediate post‐issue period. This research is the first to derive conclusive evidence that more executives in the boards with managerial skills and boards with highly specialized members facilitate price discovery in signaling issuer reputation on the first trading day. This study has implications that we provide investors with unique non‐financial information, boards' "education capital," that can be considered before making investment decisions. [ABSTRACT FROM AUTHOR]

This paper addresses a void in the research on auditing and initial public offering (IPO) failure by investigating the impact of the Big 4 auditing firms on the likelihood of an IPO failure. This research is the first comprehensive analysis of more than 33,000 global IPOs that either failed or were successful between 1995 and 2019 across a wide range of nations with vastly different regulatory, cultural, and economic settings. A cross-sectional probit regression model is utilized to investigate the influence of hiring the Big 4 auditing firms on IPO failure, building upon prior studies on IPO failure. We found strong evidence that IPO failure rates were diminished by up to 67% when one of the Big 4 auditing firms was involved in auditing the IPO prospectus. For IPO founders, hiring Big 4 auditors before an IPO is a quality signaling strategy that minimizes the risk of a failed IPO by reducing information asymmetry among IPO participants. Our findings provide useful policy implications. Hiring one of the Big 4 auditing firms before an IPO is a reassuring signaling strategy for founders, since it decreases information asymmetry among IPO investors and so lowers the risk of the IPO failing. Primary market investors now have access to credible evidence indicating that backing IPOs from companies that use the Big 4 auditing firms increases the likelihood of such IPOs being listed on stock exchanges and yields positive returns. This is the first time, as far as the academicians are aware, that conclusive evidence has been found of a strong inverse association between the presence of Big 4 audits and failure risk for IPO firms. Our research could be helpful to primary market regulators since it shows how crucial it is to encourage Big 4 audits in IPO companies. The quality work of the Big 4 auditors does lower the risk of failure in the IPO market, which might help owners of small private equities to list their firms on the IPO market, boosting economic growth. [ABSTRACT FROM AUTHOR]

Initial public offerings and mergers and acquisitions represent important opportunities for investors to exit and harvest their entrepreneurial success. Some firms are acquired shortly after their initial public offerings. This exit strategy is known as a double exit. In addition, issuing firms may choose to reincorporate in Delaware during their IPOs. In this study, we use hand-collected data from 1993 to 2020 to investigate whether and to what extent Delaware reincorporation may affect the M&As in the post-IPO stage. We use a Cox proportional hazard model to test the relation between Delaware reincorporation and the likelihood of being acquired for our sample IPOs. Recognizing that Delaware reincorporation is not a random decision, we adopt a Heckman switching regression method to estimate the relation between Delaware reincorporation and takeover premiums and announcement returns. We report that IPO firms choosing to reincorporate in Delaware experience a higher likelihood of being acquired compared to those IPO firms choosing to remain incorporated in their home states. We further document that IPO firms choosing to reincorporate in Delaware receive lower premiums in acquisitions, and experience lower abnormal returns on announcements. [ABSTRACT FROM AUTHOR]

We provide evidence regarding two unanswered and consequential questions regarding share trading liquidity, a primary motive for US listings, for the prominent listing cohort of foreign-firm US initial public offerings (FIPOs). First, we test whether FIPOs exhibit a 'liability of foreignness (Bell et al. 2012) in liquidity' (LFL) compared with matched domestic-firm IPOs (DIPOs), despite listing requirements that are more stringent than for the mature cross-listed foreign firms studied previously. Second, we test whether US IPO LFL is moderated by FIPO home country institutional attributes that promote liquidity. Our findings for 327 FIPOs from 36 countries between 1990 and 2012 reveal that US IPO LFL is moderated, but not eliminated, by FIPO home country attributes, thus indicating incomplete bonding with US institutions. These findings extend prior research and serve to inform foreign firms considering US IPOs, exchanges competing for them, listing facilitators, regulators, and investors regarding a salient listing consideration. [ABSTRACT FROM AUTHOR]

Underwriters play a pivotal role in the IPO process. Information entropy, a tool for measuring the uncertainty and complexity of information, has been widely applied to various issues in complex networks. Information entropy can quantify the uncertainty and complexity of nodes in the network, providing a unique analytical perspective and methodological support for this study. This paper employs a bipartite network analysis method to construct the relationship network between underwriters and accounting firms, using the centrality of underwriters in the network as a measure of their influence to explore the impact of underwriters' influence on the distribution of interests and audit outcomes. The findings indicate that a more pronounced influence of underwriters significantly increases the ratio of underwriting fees to audit fees. Higher influence often accompanies an increase in abnormal underwriting fees. Further research reveals that companies underwritten by more influential underwriters experience a decline in audit quality. Finally, the study reveals that a well-structured audit committee governance and the rationalization of market sentiments can mitigate the negative impacts of underwriters' influence. The innovation of this paper is that it enriches the content related to underwriters by constructing the relationship network between underwriters and accounting firms for the first time using a bipartite network through the lens of information entropy. This conclusion provides new directions for thinking about the motives and possibilities behind financial institutions' cooperation, offering insights for market regulation and policy formulation. [ABSTRACT FROM AUTHOR]

Purpose: The study examines the IPO resilience grounded on the firm's intrinsic factors. Design/methodology/approach: We examine the association of IPO performance and post-listing firm's performance with issuers' pre-listing financial and qualitative traits using panel data regression. Findings: IPOs floated in the Indian market from July 2009 to March 31, 2022, evince the notable influence of issuers' pre-IPO fundamentals and legitimacy traits on IPO returns and post-listing earning power. Where the pandemic's favorable impact is discerned on the post-listing year earning power of the issuer firms, the loss-making issuers appear to be adversely affected by the Covid disruption. Perhaps, the successful listing equipped the issuers with the financial flexibility to combat market challenges vis-à-vis failed issuers deprived of desired IPO proceeds. Research limitations/implications: High initial returns followed by a declining pattern substantiate the retail investors to be less informed vis-à-vis initial investors, valuers and underwriters, who exit post-listing after profit booking. Investing in the shares of the newly listed ventures post-listing in the secondary market can shield retail investors from the uncertainty losses of being uninformed. The IPO market needs stringent regulations ensuring the verification of the listing valuation, the firm's credentials and the intent of utilizing IPO proceeds. Healthy development of the IPO market merits reconsidering the listing of ventures with weak fundamentals suspected to withstand the market challenges. Originality/value: Given the tremendous rise in the new firm venturing into the primary market and the spike in IPOs countering the losses immediately post-opening, the study examines the loss-making and young firms IPOs separately, adding novelty to the study. [ABSTRACT FROM AUTHOR]

Purpose: This study comprehensively reviews the global literature on busy boards and audit committees. Design/methodology/approach: Six eight articles on busy boards and audit committees from prominent accounting journals are reviewed and analyzed under the "reputation" and "busyness" premise. Findings: Most studies advocating the "reputation" hypothesis have the consensus that busy directors have their benefits (knowledge spillovers), particularly regarding sharing their in-depth knowledge, experiences and expertise. This phenomenon is pronounced for younger and IPO firms, which have high advising and financing needs. From the "busyness" perspective, busy directors are too overboard in carrying out their duty effectively and responsibly. Practical implications: This study identifies future research avenues on busy boards/audit committees and suggests that policymakers and regulators should limit the number of board appointments. Originality/value: This is the first study to extensively amalgamate research on busy directors and audit committees. It reveals the various proxies used to measure the busyness of board and audit committee members and the consequences of busyness. [ABSTRACT FROM AUTHOR]

We examine U.S. dual- and single-class firms from 1980 to 2019 and document their valuation differences over their corporate life cycle. At the IPO, dual-class firms have higher mean valuations than do single-class firms, and some evidence indicates that this premium may emanate from dual-class firm founders' unique vision and leadership skills. As firms age, the valuation premium of dual-class firms tends to dissipate, possibly because dual-class agency problems increase due to a gradual widening of the wedge (the difference between insider voting and cash flow rights) in the post-IPO years. (JEL G32, G34) [ABSTRACT FROM AUTHOR]

Using a dataset of institutional bids for IPOs, we study how relationships with lead underwriters impact institutional investors' bidding strategy in the auctioned IPOs. Our paper finds that strong business ties lead to higher bid prices. The effect is more pronounced among IPO firms that receive less market attention, and is attenuated for IPOs certified by reputable intermediaries. We propose that rent-seeking incentives may be the potential mechanism for this relationship-based bidding. Our study highlights that the business connection between underwriters and institutional investors has effect on the IPO pricing. [ABSTRACT FROM AUTHOR]

The article highlights the resurgence of interest in hydrogen amidst soaring stock prices in other sectors, emphasizing the overlooked potential of hydrogen fuel cells. Topics discussed include the stock market's cyclic nature, the promising future of hydrogen economy, and the pivotal role of mature technology companies in the burgeoning hydrogen sector.

Purpose: This paper examines the relationship between the extent and quality of the four dimensions of corporate social responsibility disclosure (CSRD) namely community, environment, workplace and marketplace with the long-run share price performance of Malaysian initial public offering (IPO) companies. Design/methodology/approach: This study utilised secondary data by the content analysis of the annual reports and Datastream of 115 IPOs listed from 2007 to 2015 in Malaysia. The IPO's performance was determined by calculating the return measures under the equally weighted and value-weighted schemes of the mean abnormal returns and buy-and-hold abnormal returns covering the three years post-listing using the event-time approach. Findings: The findings demonstrate that Malaysian IPOs experience substantial overperformance and underperformance when both the IPO performance measures are benchmarked against the matched companies and market. The results indicated that the extent and quality of the community and environment CSRD dimensions are positively and significantly correlated to the IPO's performance. On the other hand, the extent and quality of the workplace and marketplace CSRD dimensions are negatively and significantly correlated to the IPO performance. Practical implications: Malaysian regulators could benefit from these findings in their endeavour to carry out a reform process on CSRD to improve its quality. The results of this study are important to investors, regulators, non-government organisations, communities and policymakers. They also enhance the understanding of companies about the importance of disclosing greater CSR information to improve their performance and profitability. Originality/value: To the researchers' best knowledge, this study provides new insights into the association between CSRD and the performance of Malaysian IPO companies, which is considered important. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to examine the reaction of anchor investors (AIs) to pre-IPO earnings management (EM). The authors use the unique detailed bid data from the Indian anchor experiment. The authors also study the reputed AIs' EM detection ability and pricing behavior in response to pre-IPO EM. Design/methodology/approach: The authors use unique AI bid data for 169 Indian IPO firms. Utilizing the logistic regression and Tobit regression models with industry and year-fixed effects, the authors examine the relationship between various measures of AI participation and proxies of short-term and long-term discretionary accruals. Findings: The authors document that pre-IPO EM is positively associated with the likelihood of anchor backing but negatively related to the likelihood of reputed anchor backing. The findings indicate that AIs are misled by pre-IPO EM, but reputed AIs are not. The authors also observe that reputed AIs, compared to the non-reputed, pay less than the upper band with increasing EM. The findings are robust to using various AI measures and EM proxies. Practical implications: The findings have significant implications for regulators in the implementation of AI concept in non-anchor markets and better implementation of policies in existing anchor settings. Findings can also be relevant for non-institutional investors in the IPO domain. Originality/value: This is one of the few studies on institutional investors' IPO bidding behavior in response to pre-IPO EM. However, this is the first study to analyze AIs' IPO bidding behavior in response to pre-IPO EM. [ABSTRACT FROM AUTHOR]

Research Question/Issue: This is a study of the relationship between business group ownership and constituent firms' adoption of Anglo‐American shareholder value governance in African firms at the undertaking of an initial public offering (IPO). Research Findings/Insights: We find business group ownership to be associated with lower Anglo‐American corporate governance adoption by constituent firms. However, this association is reversed in the institutional context of higher tribalism, while correspondingly being exacerbated in the context of lower tribalism. Theoretical/Academic Implications: We theorize that the influence of business group ownership on firms' adoption of Anglo‐American corporate governance is better understood when considering the institutional context. We highlight how informal cultural institutions are heterogeneous and thus shape the indigenous political economy and impact business groups. Specifically, we argue institutional contexts with higher tribalism are associated with more in‐group favoritism and nepotism. This association makes it critical for business group constituent firms to escape the constraints of the political economy of tribalism when attracting outside funding, leading to a higher inclination to adopt Anglo‐American governance. Contrastingly, in lower tribalism contexts, there is more universal trust across societies and an increased availability of domestic funding. Practitioner/Policy Implications: Given the proliferation of business group ownership within economies worldwide, the study provides a useful framework with which to gauge the influence of business group ownership on a constituent firm's adoption of Anglo‐American governance best practice. In particular, the study emphasizes that the interdependence of formal institutional architecture and tribalism—both fundamentally associated with the demographic shape and with the incentive structures embedded within the underlying national political economy—calls for careful considerations when making national corporate governance recommendations. [ABSTRACT FROM AUTHOR]

Research Question/Issue: This study attempts to examine how the fit of CEO and CFO high promotion focus, an important motivational‐based psychological trait, can affect new venture initial public offering (IPO) fraud. Furthermore, we explore how this relationship is moderated by CEO–CFO status similarity (firm internal environment) and environmental dynamism (firm external environment). Research Findings/Insights: Using a sample of Chinese new ventures listed on growth enterprise market from 2010 to 2016, we conduct computer‐aided content analysis to quantify CEO and CFO promotion focus. Results show that the fit of CEO–CFO high promotion focus increases the likelihood of new venture IPO fraud. Moreover, CEO–CFO status similarity and environmental dynamism strengthen this positive relationship. Theoretical/Academic Implications: We make three main contributions to the literature. First, we enrich upper echelons literature on CEO–top management team (TMT) interface by exploring how the psychological characteristic (promotion focus) of CEO–CFO dyad, a subteam of TMT, affects new venture IPO fraud. Second, we contribute to regulatory focus theory by extending interpersonal promotion fit to the context of upper echelons level and exploring its boundary conditions of CEO–CFO status similarity (internal environment) and environmental dynamism (external environment). Third, from the perspective of microfoundation, this study contributes to IPO fraud literature by investigating the antecedents of firm internal factors, specifically the psychological trait—high promotion focus fit of CEO–CFO. Practitioner/Policy Implications: By examining the fit of CEO and CFO high promotion focus, this study shows the need to consider the motivational‐based psychological traits of CEO and CFO when selecting, training, monitoring, dismissing, and compensating executives. Moreover, to prevent new venture IPO fraud, policymakers and key stakeholders such as the board of directors can consider paying much attention to firms with CEO and CFO who possess high promotion focus. [ABSTRACT FROM AUTHOR]

Based on a sample of Chinese ChiNext (Growth Enterprise Market) firms during their initial public offerings (IPOs) from 2009 to 2019, this study explores whether these firms engage in sales growth management and examines its economic consequences. We provide evidence that ChiNext firms tend to manage their sales growth to influence issuance prices during IPOs. Further, the study identifies several indicators that suggest growth‐managing firms engage in more aggressive and riskier promotional strategies, such as longer turnover days of receivables, lower gross profit margins and higher allowance ratios for doubtful accounts. The study also finds that growth‐managing firms are more likely to have higher price‐to‐earnings ratios, offer prices, overfund ratios, first‐day closing prices and a higher percentage of positive posts, suggesting that these firms aim to inflate their growth to attract more funds from financial markets by influencing investors' expectations. Additionally, we find a negative relationship between sales management and post‐IPO stock returns, indicating that investors cannot effectively identify sales management by ChiNext IPO firms. Cross‐sectional analysis also shows that growth‐managing ChiNext IPO firms are likely to have depressed post‐IPO performance, whereas the market intermediary (brokers, auditors and asset appraisal institutions) with a good reputation helps to alleviate future performance reversals. [ABSTRACT FROM AUTHOR]

Purpose: This study investigates the impact of pre-IPO earnings management on investor demand in the Indian IPO market. It also examines whether earnings management by issuer firms affects IPO valuation, a topic that is underexplored in accounting research. Design/methodology/approach: The study uses the data of 310 IPOs from India during the period 2000–2021. The association between pre-IPO earnings management with investor demand and valuation is tested using cross-sectional ordinary least squares regression models with heteroscedasticity-robust standard errors. Findings: The study finds that the degree of pre-IPO earnings management impacts retail investor demand, measured as their over-subscription multiple. Pre-IPO earnings management is unrelated to institutional investor bidding. Further, this paper suggests no relation between pre-IPO earnings management and IPO valuation. Research limitations/implications: Future studies could explore various other forms of earnings management and their impact on investor demand and valuation. Practical implications: The findings of this study will help the investors and regulators to understand the practice of earnings management among IPO firms and how it is related to IPO demand and valuation. Originality/value: This study contributes to the existing literature on IPO-earnings management and investor demand by documenting that issuer firms engage in earnings management to influence investor demand, particularly retail investor demand. Analysis of IPO valuation reveals that earnings management is mostly unrelated to IPO valuation, contrary to the general perception in the literature. [ABSTRACT FROM AUTHOR]

SUMMARY: We examine whether firms undertaking an initial public offering (IPO) exhibit less earnings management when individual investment bankers have prior experience in public accounting. Although auditors are primarily responsible for providing external monitoring of the financial reporting process, individual bankers also have strong incentives to improve accounting quality in firms going public. We predict a negative relation between public accounting experience and IPO firms' earnings management because working in public practice fosters individual bankers' accounting expertise and conservative personalities. In exploiting unique disclosures of investment bankers' identities and characteristics in China, our analysis indicates that bankers with early-career public accounting experience constrain IPO firms' accrual-based earnings management. Consistent with expectations, we find that this evidence is more pronounced if the accounting firm that employed the future investment banker is larger, is permitted to audit listed companies, and was previously subject to a regulatory sanction. Data Availability: Most data are publicly available from the sources identified in the paper. Hand-collected data from the Securities Association of China (SAC) can be made available upon request. JEL Classifications: G24; M41; M42. [ABSTRACT FROM AUTHOR]

We investigate the financing and performance of international entrepreneurship in an environment that was characterized by severe information problems and very weak investor protection. Despite these problems, new ventures could raise large amounts of equity and debt on the Belgian capital market between 1890 and 1914. Many of these firms were international new ventures (INVs) with their main operations abroad, often far away from Belgium. We find that INVs raised much more capital but were less likely to pay a dividend than domestic new ventures (DNVs). They were less likely to issue a bond and had a higher cost of debt when operating further away from Belgium. Performance after listing was generally bad for new ventures throughout the period, but it was much worse for INVs than for DNVs. Our findings confirm contemporary arguments that unprotected, financially illiterate investors were expropriated by INV founders. [ABSTRACT FROM AUTHOR]

Growth and innovation are primary arguments for firms that aim to go public and access resources from the stock market. So it is ironic that going public is, for a majority of firms, associated with a pronounced slump in breakthrough innovation. This article proposes an actionable, marketing-related explanation for why some firms that go public manage to beat the post–initial public offering (IPO) innovation slump: innovation imprinting. The authors argue and demonstrate that firms that engage in innovation imprinting before going public attract a segment of concordant investors whose risk preferences are more supportive of breakthrough innovation than investors at large. These investors, in turn, reward the firms' continued introduction of breakthrough innovations after they have gone public. By analyzing the innovation patterns of 207 firms in the consumer packaged goods sector before and after an IPO, the authors observe that one-third of firms are able to maintain or beat their pre-IPO levels of breakthrough innovations after going public. By studying their actions, the investors they attract, and their financial performance and survival rates, the authors provide empirical evidence for the importance of innovation imprinting and concordant investors in helping firms beat the post-IPO innovation slump. [ABSTRACT FROM AUTHOR]

I study venture capital firms' (VCs) use of public market information and how attention to this information relates to private market investment outcomes. I link web traffic to public filings hosted on EDGAR to individual VCs. VCs analyze public information about industry peers before most deals. An increase in industry filing views relates positively to the probability of an exit through acquisition, suggesting that public information helps identify paths to acquisition. The effect is stronger when the VC has less access to private information, especially for low-reputation VCs. Policymakers should consider spillover effects on private markets when setting public disclosure requirements. [ABSTRACT FROM AUTHOR]

We examine the impact of oil price uncertainty on IPO volume in the oil and gas sector. By using the implied volatility of oil options, a forward-looking uncertainty measure, we identify the effect of uncertainty on the going-public decision. Oil price uncertainty exhibits a strong negative relation to IPO volume. A one standard deviation decrease in the implied volatility results in a 29% increase in the number of quarterly IPOs. The effect is concentrated among the price-sensitive upstream producers. We further report that uncertainty positively impacts the IPO withdrawal decision and increases the value of postponing the offering. Keywords: Energy economics, IPOs, Implied crude oil volatility, Oil and gas sector, Oil price uncertainty, 1. INTRODUCTION Oil price uncertainty can affect both firms' investment and financing decisions. The impact of oil price uncertainty on investments in the oil and gas sector is well documented [...]

This article documents the partial shift from the government-based approval system to the market-based registration system and uses a stochastic frontier model with inefficiency heterogeneity (SFMH) to separate the component of IPO initial returns into premarket underpricing and aftermarket mispricing, then examines the effect of the implementation of registration system on premarket and aftermarket pricing efficiency, respectively. The results show that the premarket underpricing is lower but the aftermarket mispricing is higher under the registration system than under the approval system. Overall, this article indicates that the implementation of registration system has improved the IPO pricing efficiency of the premarket but reduced that of the aftermarket. [ABSTRACT FROM AUTHOR]

The study focuses on initial public offerings (IPOs) listed on the National Stock Exchange (NSE) during the period 2000 to 2021. The study found 527 IPOs issued over those two decades after excluding further public offerings (FPOs) and rights issues. These IPOs raised 3.06 tn from the capital market. Out of the 527 IPOs, 60 companies have been delisted, and 29 stocks are thinly traded on the NSE. These 29 companies constitute around 20% of the total IPOs issued during the period of analysis. The paper highlights the IPO trends, industry participation, and the causes for the delisting and disappearance of companies from the Indian stock market. According to the findings, noncompliance with regulatory requirements combined with corporate governance issues caused IPOs to be delisted and disappear from the Indian stock market. [ABSTRACT FROM AUTHOR]

It has been widely known that good firms use lower IPO prices to signal their superior prospects to investors. The underlying intuition is that good-type firms signal their type by underpricing their initial issue of shares, because investors can rationally infer that only the best can recoup the signaling cost from subsequent issues. In this paper, we argue that the intuition is not complete. We show that a good firm always has an incentive to deviate to raise the IPO price slightly from its equilibrium price if the price is the only signaling device, implying that signaling by underpricing is not an equilibrium phenomenon in the case of one-dimensional signal. Then, we show that if the firm can choose the equity fraction to be sold as well, a good-type firm can signal its high profitability by choosing a low equity fraction. In this case, a good-type firm engages in underpricing, but it cannot be a signal because both types choose same prices in equilibrium. We also discuss the effect of investor protection laws on IPO underpricing. [ABSTRACT FROM AUTHOR]

In contrast to post-listing dividend initiations, the corporate finance literature offers limited coverage of pre-IPO dividends. The present inquiry assesses IPOs in Hong Kong where both pre-listing dividend distributions and IPO vendor sales occur with regularity. As a means of distributing cash to controllers, pre-IPO dividends potentially offer an exit route for insiders without the need for a conspicuous vendor sale at IPO. This study extends the limited evidence on the "Pre-IPO Dividend puzzle" (Martin and Zeckhauser 2010) and the information signaling role of prelisting cash distributions (Wang et al. 2023) in two important ways. First, unlike the mainland PRC, where regulatory proscriptions discourage secondary offers, vendor sales occur often in Hong Kong. Second, in contrast to the US, mainland PRC, and most other jurisdictions, Hong Kong's tax environment neither encourages nor discourages dividends relative to capital gains. For individual investors, the Hong Kong SAR Government imposes a zero rate of tax on both stock income and capital gains. Most issuers in the Hong Kong market during the study period demonstrated a significant record of pre-IPO profits. Accordingly, the incidence of cash payouts is at a high rate relative to rates evident in other major IPO locales. Hong Kong therefore provides a novel setting for investigation of pre-IPO dividend behavior. Present study findings suggest that pre-IPO cash distributions do not substitute for IPO vendor sales. Post-listing cash distributions also exhibit little to no association with vendor sales. However, ex-ante uncertainty, as proxied by offer price range, bears positive correlation with the frequency of post-listing dividend omissions. Finally, issuers distributing cash pre-IPO demonstrate greater frequency of pay-outs post-IPO. [ABSTRACT FROM AUTHOR]

This paper examines mutual funds' dual role as both clients and shareholders of broker banks. Mutual funds are more likely to hold and significantly overweight stocks of their broker banks. In line with the portfolio decisions, fund voting is biased toward broker management in contentious proposals. Such voting bias is inconsistent with maximizing broker banks' shareholder value yet significantly affects voting outcomes and the presence of contentious proposals at the banks' shareholder meetings. Furthermore, we show that although client funds are rewarded with preferential initial public offering allocations from connected brokers for their voting support, fund managers' engagement in reciprocal practices is ultimately determined by the economic tradeoffs they face. Our study not only uncovers a new mechanism—being brokers' friendly shareholders—through which the two parties maintain their quid pro quo relationships but also raises a broader concern about governance of important financial institutions. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4820. [ABSTRACT FROM AUTHOR]

Purpose: Existing studies suggest that negative impacts emanating from corporate fraud revelations may diffuse to other firms through lower trust and lower market participation. Extending this literature stream, the authors examine whether corporate fraud revelations are associated with higher costs of raising capital through initial public offerings (IPOs) for industry peers. Design/methodology/approach: The authors employ several analysis techniques including univariate analysis, multivariate regressions, propensity score matching methodology, and probit estimation. The sample consists of 3,015 US IPO firms for the 1996–2021 period. Findings: By adopting US private securities class action lawsuits as a proxy for the presence of corporate fraud, the authors find that fraud revelations are associated with higher IPO underpricing, higher post-IPO stock return volatility and increased likelihood of withdrawal from the offering for industry peers. The findings are robust to alternative industry definitions and litigation proxies and to the inclusion of a battery of controls, including industry, state and year fixed effects. Originality/value: This study presents private firms with an additional industry litigation factor to consider when assessing the marginal costs of going public. [ABSTRACT FROM AUTHOR]