IPO valuation and performance: evidence from the UK main market

Selling stock to the general public is one important method by which firms are able to raise new equity capital. If the firm sells stock for the first time to the general public, it is called an initial public offering (IPO). Subsequent to the IPO, firms may seek to raise further equity capital by offering to sell new shares through a seasoned equity offering (SEO). In the UK, most young/small firms initially raise equity capital from a small number of investors through private placements. If a firm prospers and needs additional equity capital, it may choose at some point to go public by selling stock through an IPO. By issuing publicly traded equity, the firm establishes both a market value for the firm and a market for its common stock. There have been many IPO studies that record the so-called “Underpricing anomaly” as a primary stylised fact of IPOs. The underpricing refers to the significance increase of the IPO market price over the first few days after the initial listing. This fact suggests that the IPO pricing is not simple very few information about the issuing firm is available to the market prior to IPO. This study is to examine the IPO valuation based on the prospectus information, which is perceived as comprehensive information about the firm prior to the IPOs. Furthermore, this study is also to observe the impact of the prospectus information on the IPO after market performances.

Level dc:type.qualificationlevel

PhD

Grantor dc:publisher.institution

University of Glasgow

Year dc:date.issued

2005

Author dc:creator

• Hutagaol, Yanthi

• HF Commerce
• HG Finance

Language dc:language

en