Sign In
Not register? Register Now!
Pages:
1 page/≈275 words
Sources:
Level:
APA
Subject:
Literature & Language
Type:
Other (Not Listed)
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 3.6
Topic:

Monitoring as a Motivation for IPO Under Pricing (Other (Not Listed) Sample)

Instructions:

summarizing a 32 page document

source..
Content:


MONITORING AS A MOTIVATION FOR IPO UNDER PRICING
Name:
Institution:
Date:
During an Initial Public Offer (IPO), insiders make several considerations that would enable them meet their goals. One of the considerations made by the insiders is under-pricing of the Issue. Under-pricing generates excess demand, which leads to biased rationing against large investors who usually have an incentive when it comes to monitoring the firm.
This is often witnessed in Dual-Class IPOs, where despite the insiders wanting to invite investors, they always wish to retain a say in the decision making process thus insulating themselves from outside control . Dual-Class unlike Single-Class IPOs shield the firm from being an acquisition target since the outsiders voting power is curtailed.
Brennan and Franks thus developed the reduced monitoring hypothesis after observing that insiders due to the fear of being monitored or removed by the new shareholders usually under-price the new shares thus ensuring that smaller investors are allocated a larger share of the issue and thus by the principle of one-share, one-vote the few large investors would have less say in the firms decision making.
In contrast, Stoughton and Zecher argued that for insiders wishing to maximize the firm's value will usually ration IPO shares being allocated to the smaller investors. According to them, the firm's revenues more of increase with outside monitoring thus the increased monitoring Hypothesis.
The research conducted by Arugaslan, Cook and Kieschnick on the contrary arrives with different conclusions about the role of monitoring in IPO under-pricing including that; dual class IPOs are under-priced than single c

...
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:

Other Topics:

  • Monitoring as a Motivation for IPO Underpricing (Essay #2)
    Description: During an Initial Public Offer (IPO), insiders make several considerations that would enable them meet their goals...
    1 page/≈275 words| APA | Literature & Language | Other (Not Listed) |
  • Experimental Designs
    Description: Some of the concepts discussed in the paper include Analysis of Variance (ANOVA),probabilistic equivalence,and independent variables amomg others....
    5 pages/≈1375 words| APA | Literature & Language | Other (Not Listed) |
  • The Effect of Probiotics on Atopic Dermatitis in Children
    Description: The objective of this article is to evaluate the value of probiotics for treating eczema through a systematic review of randomised-controlled trials...
    3 pages/≈825 words| APA | Literature & Language | Other (Not Listed) |
Need a Custom Essay Written?
First time 15% Discount!