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Volume 4, Numbers 1 & 2 / March/June 2000 , Pages 5-153
Multinational Finance Journal, 2000, vol. 4, no. 1&2, pp. 1-4
George J. Papaioannou , Hofstra University, U.S.A.    Corresponding Author
Nickolaos G. Travlos , Athens Laboratory of Business Administration (ALBA), Greece

Abstract:
No Abstract

Keywords : n/a
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Multinational Finance Journal, 2000, vol. 4, no. 1&2, pp. 5-34
Richard Chung , Concordia University, Canada    Corresponding Author
Lawrence Kryzanowski , Concordia University, Canada
Ian Rakita , Concordia University, Canada

Abstract:
The overallotment option (OAO) gives underwriters the right to acquire additional shares from the issuing firm at the offer price (less underwriting fees) in order to meet any excess demand for an issue. Thus, underwriters can use overallotment options to stabilize market prices post-issue by increasing the supply of shares for oversold issues. Unlike IPOs in the U.S., the Canadian evidence finds that OAOs are included less frequently, that underwriting fees are positively associated with OAO inclusion, and that the OAO appears to play a minor role in market price stabilization, which is itself less detectable and appears to be limited to the very early stages of secondary market trading. These results suggest that the role of the OAO differs markedly for IPOs in Canadian versus U.S. markets

Keywords : initial public offerings; overallotment options; price stabilization; underwriting fees
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Multinational Finance Journal, 2000, vol. 4, no. 1&2, pp. 35-68
Tim Brailsford , Australian National University, Australia    Corresponding Author
Richard Heaney , Australian National University, Australia
John Powell , University of Otago, New Zealand
Jing Shi , Australian National University, Australia

Abstract:
The market for unseasoned equity has the unusual and distinguishing feature of periods of concentrated activity in terms of both volume and underpricing. This paper formally documents the existence of such periods using a regime-switching model that dates transitions between hot and cold states. A number of hot periods are identified over a 20-year period using a variety of IPO activity measures that capture different aspects of new issue volume, proceeds and underpricing. The study further documents a leading relationship between underpricing and IPO volume of up to six months. This relationship supports the contention that the decision to issue is a function of current underpricing. Various reasons are hypothesised for this result and the paper finds supportive evidence through a VAR analysis that reveals the influence of stock market and business conditions.

Keywords : hot issues; IPOs; regime-switching; stock market; unseasoned issues
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Multinational Finance Journal, 2000, vol. 4, no. 1&2, pp. 69-99
Wolfgang Aussenegg , Vienna University of Technology, Austria    Corresponding Author

Abstract:
This article compares the characteristics and the price behavior of case-by-case privatization initial public offerings and private sector initial public offerings in Poland over the first nine years after the reopening of the Warsaw Stock Exchange in April 1991. There is evidence that the Polish government is market-oriented, trying to build up reputation for its privatization policy over time by underpricing, selling a high fraction at the initial offer and underpricing more when selling to domestic retail investors. In the long run privatization initial public offerings experience neither an under- nor an overperformance. A lower political influence has no effect on the long-run performance of privatized companies

Keywords : initial public offerings; long-run performance; privatization; underpricing
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Multinational Finance Journal, 2000, vol. 4, no. 1&2, pp. 101-132
Neil Hartnett , The University of Newcastle, Australia    Corresponding Author
Jennifer Römcke , The University of Newcastle, Australia

Abstract:
Contemporaneous evidence of corporate revenue and profit forecasting error is provided in a different institutional context, Australian sharemarket initial public offerings. This article extends the literature on company forecast risk by incorporating new proxies for forecasting error (float motive, subscription price premium, range of activities and internationalisation) and by refining others. The study investigates the association between earnings forecast risk and conventional ex-ante uncertainty proxies used to explain IPO underpricing. Ex-ante and ex-post explanatory variables are distinguished and a forecast error prediction model is tested. The results show revenue forecast errors were smaller and less sensitive than those for profit. Strong associations are reported between forecast error and float motive, audit quality and unanticipated industry activity. The link between earnings forecast error and proxies for initial public offering underpricing is observed. Predictability was poor regarding individual company forecast error, but improved for portfolio average forecasting error.

Keywords : error; forecast; IPO; prediction, profit; underpricing
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Multinational Finance Journal, 2000, vol. 4, no. 1&2, pp. 133-153
Li Li Eng , The National University of Singapore, Singapore    Corresponding Author
Hwee Shan Aw , The National University of Singapore, Singapore

Abstract:
This article investigates the impact of fundamentals of initial public offering (IPO) firms on two categories of investors, large and small investors. In the decision to purchase IPOs, the demand by large investors is positively associated with earnings yield, firm size and underpricing, and negatively associated with book-to-market ratio. Large investor demand is higher for issues denominated in the local currency (Singapore dollars) than issues denominated in foreign currencies. In contrast, the demand by small investors is negatively associated with earnings yield, firm size and underpricing. Small investor demand is also lower for issues denominated in Singapore dollars than issues denominated in foreign currencies

Keywords : initial public offerings; fundamentals; small investors; large investors
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