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impact of industry-specific variables on the performance of initial public offerings

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Date Issued:
2000
Summary:
This dissertation examines the effect of variables specific to different industries on initial public offerings (IPOs). It has been widely accepted that IPOs perform well in the immediate aftermarket and perform poorly in the subsequent months. The uncertainty surrounding IPOs has been a frequently cited reason for the initial underpricing. The size of the offering, underwriter prestige, the number of uses of gross proceeds, and the level of inside ownership are a few of the variables that have been found to measure the uncertainty of IPOs across industries. The uncertainty of IPOs in different industries may also be affected by variables that are unique to that industry. The level of interest rates and the amount of regulation may affect the performance of existing financial service firms. The uncertainty of IPOs in the financial services industry may also be affected by these variables. This study finds that some financial service firm IPOs are affected by the level of interest rates. Some regulatory changes increase the uncertainty, and therefore the initial returns, of IPOs of financial service firms. The type of ownership structure affects the management of a firm due to differing agency costs. A mutual holding company (MHC) is a mutual company that issues a minority stake to the public. The MHC structure has been common among savings banks and is growing in popularity in the life insurance industry. The lack of takeover possibilities and stockholder control diminishes the risk taking behavior of MHCs in the thrift industry. Savings banks that choose the MHC structure experience lower initial returns without significant long run differences than savings banks that choose to convert to a completely stockholder owned bank. The operating characteristics may also affect the uncertainty of the firm. The internet allows firms to enter into an industry while having completely different operating structure than many of the other competitors. This study finds that firms that have an internet focus have higher initial returns than a matching set of IPOs. The changing environment, due to technology and low barriers to entry, increases the uncertainty of internet firms.
Title: The impact of industry-specific variables on the performance of initial public offerings.
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Name(s): Johnston, Jarrod G.
Florida Atlantic University, Degree grantor
Madura, Jeff, Thesis advisor
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Issued: 2000
Publisher: Florida Atlantic University
Place of Publication: Boca Raton, Fla.
Physical Form: application/pdf
Extent: 114 p.
Language(s): English
Summary: This dissertation examines the effect of variables specific to different industries on initial public offerings (IPOs). It has been widely accepted that IPOs perform well in the immediate aftermarket and perform poorly in the subsequent months. The uncertainty surrounding IPOs has been a frequently cited reason for the initial underpricing. The size of the offering, underwriter prestige, the number of uses of gross proceeds, and the level of inside ownership are a few of the variables that have been found to measure the uncertainty of IPOs across industries. The uncertainty of IPOs in different industries may also be affected by variables that are unique to that industry. The level of interest rates and the amount of regulation may affect the performance of existing financial service firms. The uncertainty of IPOs in the financial services industry may also be affected by these variables. This study finds that some financial service firm IPOs are affected by the level of interest rates. Some regulatory changes increase the uncertainty, and therefore the initial returns, of IPOs of financial service firms. The type of ownership structure affects the management of a firm due to differing agency costs. A mutual holding company (MHC) is a mutual company that issues a minority stake to the public. The MHC structure has been common among savings banks and is growing in popularity in the life insurance industry. The lack of takeover possibilities and stockholder control diminishes the risk taking behavior of MHCs in the thrift industry. Savings banks that choose the MHC structure experience lower initial returns without significant long run differences than savings banks that choose to convert to a completely stockholder owned bank. The operating characteristics may also affect the uncertainty of the firm. The internet allows firms to enter into an industry while having completely different operating structure than many of the other competitors. This study finds that firms that have an internet focus have higher initial returns than a matching set of IPOs. The changing environment, due to technology and low barriers to entry, increases the uncertainty of internet firms.
Identifier: 9780599806399 (isbn), 12644 (digitool), FADT12644 (IID), fau:9526 (fedora)
Collection: FAU Electronic Theses and Dissertations Collection
Note(s): College of Business
Thesis (Ph.D.)--Florida Atlantic University, 2000.
Subject(s): Going public (Securities)
Stocks--Prices
Held by: Florida Atlantic University Libraries
Persistent Link to This Record: http://purl.flvc.org/fcla/dt/12644
Sublocation: Digital Library
Use and Reproduction: Copyright © is held by the author, with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FAU
Is Part of Series: Florida Atlantic University Digital Library Collections.