Impact of the Corporate Law Economic Reform Program Act 1999 on initial public offering prospectus earnings forecasts

Commencing 13 March 2000, the Corporate Law Economic Reform Program Act 1999 (Cth) introduced changes to the regulation of corporate fundraising in Australia. In particular, it effected a reduction in the litigation risk associated with initial public offering prospectus disclosure.We find that the change is associated with a reduction in forecast frequency and an increase in forecast value relevance, but not with forecast error or bias. These results confirm previous findings that changes in litigation risk affect the level but not the quality of disclosure. They also suggest that the reforms’ objectives of reducing fundraising costs while improving investor protection, have been achieved.

Board composition changes after an initial public offering

This paper follows Luoma and Goodstein (1999) who find increased stakeholder representation on the boards of U.S. companies. This study describes the changes in board composition by director type (stakeholder or shareholder) and by gender (male or female) of large Australian companies after listing. We find a substantial increase in the number of directors holding shares in the firms in which they hold their directorships and that essentially
directors putting their own capital at risk is an important element in the Australian capital market. We also report a slight decrease in the proportion of female directors post listing.

Audit quality, auditor compensation and initial public offering underpricing

We jointly study the impact of audit quality on auditor compensation and initial public offering (IPO) underpricing using a sample of Australian firms going public over the period 1996–2003. We find that quality (Big Four) audit firms earn significantly higher fees than non-Big Four auditors, and audit quality is positively associated with IPO underpricing. The positive relation between audit quality and underpricing is more pronounced for small issues, IPOs underwritten by non-prestigious underwriters, and those that are not backed by venture capitalists. Taken together, our results suggest that quality auditors serve as a signalling device that enhances post-issue market value of equity.

Effective derivative hedging and initial public offering long-run performance

We investigate the role of corporate currency risk management through the use of financial derivatives in influencing the long-run performance of a sample of Australian resources companies. We find that derivative users generally outperformed nonderivative users in the 5-year period following listing. Effective derivative users consistently outperformed the nonhedgers. Furthermore, within the population of derivative users, effective derivative users tended to perform better than ineffective hedgers. Our results indicate that effective financial risk management plays a role in long-run IPO performance.

Impact of the Corporate Law Economic Reform Program Act 1999 on initial public offering prospectus earnings forecasts

Commencing 13 March 2000, the Corporate Law Economic Reform Program Act 1999 (Cth) introduced changes to the regulation of corporate fundraising in Australia. In particular, it effected a reduction in the litigation risk associated with initial public offering prospectus disclosure. We find that the change is associated with a reduction in forecast frequency and an increase in forecast value relevance, but not with forecast error or bias. These results confirm previous findings that changes in litigation risk affect the level but not the quality of disclosure. They also suggest that the reforms' objectives of reducing fundraising costs while improving investor protection, have been achieved.

Initial public offering

O presente relatório foi realizado no âmbito do estágio curricular do Mestrado em Análise Financeira do Instituto Superior de Contabilidade e Administração de Coimbra que decorreu na Critical Software S.A, na sua sede, em Taveiro, Coimbra. O relatório divide-se que três partes, nomeadamente, na caracterização da entidade de acolhimento e descrição das actividades desenvolvidas, no estudo da possibilidade de entrada em bolsa de valores da Critical Software e por último algumas notas conclusivas do tema apresentado. Os objectivo deste relatório consiste no estudo da Oferta Publica Inicial (Initial Public Oferring) aplicada à Critical Software, ou seja, pretendo analisar se a operação é vantajosa para a empresa e explanar as vantagens e desvantagens que advém desta operação. Este relatório explica as diversas exigências, procedimentos e custos que esta operação acarreta para a empresa.

CTT, the mail going public

The main purpose of this case-study is to analyse CTT’s privatisation process, a previously Government-owned firm, which went public in 2013, under the terms of the adjustment program agreed between Portugal, the European institutions (ECB and European Commission) and the IMF. The emphasis will be placed on the IPO process, but also on the company itself (its history, current situation and prospects for its new phase, as a publicly listed company). This piece of work aims to evaluate the different alternatives for the privatisation of the company along with the respective implications, as well as the outcome of the actual decision taken by the Portuguese Government. One key aspect of the case is also to understand the importance that the privatisation of the Royal Mail, which can be seen as a peer of the Portuguese company, in the unfolding of the process and in the choice of the privatisation model. The case intends to show how the British process influenced the subsequent option of the Portuguese entities to sell CTT through an IPO, instead of a trade sale. All in all, the overall objective of this case-study is to analyse CTT’s successful sale process, which created the first Portuguese company with 100% free-float. 3 On the last days of November 2013, Steven Bernstein was staring at the window of his office overlooking downtown Manhattan, not even noticing the intense rain that was pouring down. As senior manager at ABC Fund, a pension fund responsible for managing more than 800 million dollars, his thoughts were focused on a very important decision that ABC Fund would have to make in just a matter of days. The American pension fund was considering whether or not to invest in the upcoming Initial Public Offering of CTT- Correios de Portugal, the Government-owned Portuguese mail company. Is this investment opportunity in accordance with the risk profile of a pension fund? Is it a wise decision to acquire shares in a Portuguese company when the country is at the centre of the European Sovereign debt crisis, going through a very demanding economic adjustment program imposed by its bail-out creditors? Would the creation of Portugal's Postal Bank make CTT a sure bet today when its price does not fully reflect the future benefits from entering financial services? Those were some of the questions that were constantly in Mr. Bernstein’s mind over the last couple of days and he was struggling to find the answers…

The importance of intangible assets in initial public offerings

This paper follows Beatty and Ritter (1986), who argue that lower uncertainty about the value of an initial public offering (IPO) reduces the 'need' for the underpricing of an IPo. Australian IPOs often identify the existence of intangible assets such as goodwill, licenses, brand names, trademarks, patents and capitalized research and development costs in the prospectus. This paper analyses if IPOs identifying the existence of such intangible assets in the prospectus might reduce uncertainty about their valuation and hence allow a lower underpricing return. While the reporting of intangible assets such as goodwill and license costs in the prospectus are not significant ingredients in the level of underpricing, the identification and valuation of intangible assets such as brand names, trademarks, patents and capitalized research and development costs is significant in reducing the level of underpricing return. Our findings are also consistent with previous studies concluding that both the size of the new issue and the use of an underwriter are important in the level of underpricing return.

Managing news coverage around initial public offerings

We examine opportunistic behavior of initial public offering (IPO) firms in Taiwan where they are required to disclose their own earnings forecasts and are unrestricted in releasing news around the offerings. We find that prior to the offerings, IPO firms tend to report higher earnings, disclose inflated earnings forecasts, and manage more good news. News management, however, emerges as the most predominant factor in aftermarket stock prices. In particular, IPO firms have a strong preference for releasing good news related to strategy/policy that may simply provide a vision of a firm's future. Furthermore, the news releases are often forward-looking when they are positive about the firms but tend to be realized when they are negative. IPO firms also tend to engage in more window dressing activities before a larger sale of IPO shares from existing shareholders or a larger decline in insiders' holdings. Our analysis shows that managerial optimism cannot fully account for their behavior.

Incentives to underprice

an initial public offering, the choices made by issuers, such as the offer price, might not appear to be wealth maximizing. In this article, we argue that the choices are strategic. Based on the model developed by Barry (1989), we show that the average change in the issuer's wealth (4.52 per cent) is lower than the average loss implied by underpricing (12.09 per cent). Our results support the notion that the choices issuers make at the offering generate a compensatory benefit in the aftermarket. That the issuer may well not suffer a net wealth loss from the offering is in accordance with continued initial public offering activity.

IPO failures around the world

This thesis consists of two essays on IPO failures around the world. IPO failures are defined as IPO withdrawals (Essay 1) or delistings of recent IPOs for negative reasons (Essay 2). A common theme that runs through the two essays is the importance of institutional and cultural characteristics in explaining cross-country differences in IPO failures.

O underpricing inicial e as empresas cotadas na Euronext Lisbon

Dissertação, Mestrado, Contabilidade e Finanças, Instituto Politécnico de Santarém, Escola Superior de Gestão e Tecnologia, 2013