2.1 Motivations of IPO
According to the empirical IPO research from Brau and Fawcett (2006), they document that the four motivations for IPO and one of them states that the IPOs could serve as strategic moves. Chemmanur and Fulghieri(1999, cited in Brau et al., 2006) said that going-public decision can broaden the ownership base of the firm. Moreover, Jones et al.(1999) argued that governments divested state-owned enterprises (SOEs) and privatized them via public share offerings. Therefore, the IPO of RMG is one of kit-tool to finish its privatization. The whole reform of RMG is based on the two government reviews by Richard Hooper (National Audit Office, 2014)who reviews the RMG urgently need to reform to compete with its postal rivals.
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Jones et al.(1999) also argue under-pricing SOEs stocks could be caused by some policy objectives. For example, they point out that under-pricing is necessary for government issuers to earn their public reputation when the uncertainty about policy is high. And Boehmer and Fishe (2001) pointed out, under-pricing could increase trading volume of stocks in post-IPO period. Back to RMG case, there was a 72% increase in the share prices over the first five months of trading which the under-pricing could be a feel-good factor for Royal Mail stocks on the secondary …show more content…
Firstly, Ritter(1980, cited in Brau et al., 2006) and others showed that IPOs come in waves which the numbers of IPO would be increased in a certain stage. Further study from the Brau(2006) pointed out that the management team would prefers to intend to flotation in bull market for higher valuation in stock prices, and vice versa.
Besides that, Choe et al.(1993) also assert that firms are accessing external capital for further growth when firms reaching to a certain stage in business cycle. And companies with larger sizes and higher valuation are more likely to go public(Pagano et al., 1998).
According to the Hooper’s review, the government needs the Group to go public and access private capital to finish its modernized programmes which the company was at the period of transformation. And Royal mail was successfully going public which as a profitable business(National Audit Office, 2014). Meanwhile, the Group has a massive market shares and huge employment
Eckbo and Masulis (1992) open their paper by explaining the decline in rights issues and the surge in firm commitments. To show this Eckbo and Masulis use a sample of 1,249 equity offers between 1963-1981.
Community treatment actions otherwise known as CTOs can be used to help many individuals with mental illness and their families. If an individual has been in the hospital under the Mental Health Act the person’s physician usually psychiatrist can arrange for community treatment order (Byrick & Renshaw, 2012). This is to help the patient comply with the doctor’s orders while not in the hospital. CTO is a doctor’s orders for a person to receive treatment as well as supervision while in the community. This is used as a care and treatment plan to help with the patients needs ranging from medications to appointments. The purpose of a CTO as stated by Byrick and Walker-Renshaw (2012) from the Mental Health Act: 33.1(3): “The purpose
... Capital, Corporation Finance and the Theory of Investment", The American Economic Review, vol. 48, no. 3, pp. 261-297.
The process of doing this cased the company to ask for help from other competitors about the exact price to offer in the market. Investors knew that the price might be among 22 to 24 per share. However, the JetBlue noticed that the IPO demand is anticipated to be more than 5.5 million. Thus, the management requested to increase its price to 25-26, this would make the management concerned to convince the shareholders that the higher price improve the company in the market. Furthermore, the company was scared if this strategy would hurt sales in future. They should decide if the higher price would improve company technique in stock
...ods when the total number of buyers will dominate. Therefore, it has an incontrovertible influence of stock prices, and on the contrary, the minority of people is ready to pay towards.
The price and liquidity of the company’s shares may be affected by market conditions as a whole no matter how well the business is run.
The Royal Mail is a FTSE 100 company founded nearly 500 years ago by Henry VIII under the name “The King’s Post” (http://www.royalmailgroup.com/ 2015). The UK Government on 15th of October 2013 began the process of transferring ownership of the RM from public hands to private investors. The first sale the government sold shares to the value of £1.98 to a mixture of staff and institutional investors. The shares were split such that the government retained a 30% stake, RM staff received 10% (free) and 60% was sold to institutional investors. The Government sold it remaining shares on 11th of June (15% to investors and 1% given to staff) and 12th of October (13% to investors, 1% given to staff) (House of Commons 2015).
Initial Public Offerings (IPOs) are common ways for small companies to grow and expand by increasing their availability of capital. The Initial Public Offering started seeing a strong increase in popularity in the late 1990's. As a result of the growing popularity resulting in the dot com explosion, the term "IPO" became a household name. In order to understand how IPOs work, its best to first know how IPOs are created.
There is unlimited space for growth in a public company due to the allowance of unlimited shares being sold allowing that money to be injected into a capital fund to help with the expansion and growth of the business.
If a firm is apart of an industry with low entry costs such as real estate, it is more likely to go public. “We [determined] that companies from industries with low barriers to entry are more likely to go public in order to adopt more aggressive product market strategies that will deter new entrants” (Jong 168). In these cases, the larger corporations often force the newly founded firms out of business or buy them out. Those in less competitive and emerging markets are also more likely to go public. In this case, everyone is trying to take the company public before everyone else figures out how to duplicate their product or service. This is basically a first come, first serve type of IPO. In the past, the firm that grows the fastest often ends up controlling the new economic sector. As this academic journal has revealed, there is specific types of situations that result in companies remaining successful after the initial public offering is
The topic of IPO spinning is one that has not received much attention in the recent past. Amidst the recent financial crisis we have experienced the IPO market became relatively quiet. However, there is a large consensus that the IPO market may become much more active in the near future and it seems like an appropriate time to look at an issue that may again surface. We examined the article “A New Look at an Old Trick: IPO Spinning” from The Wall Street Journal. This article gives a brief outline of what IPO spinning is, a look at one of the more high profile cases of Frank Quattrone, and provides some evidence of the effects it has from a study by Xiaoding Liu and Jay Ritter.
Tesla Motors Inc. is an American public company which is known worldwide because of its experience in designing, manufacturing and also the selling of electric cars and electric components for vehicles. The motor was started back in the year 2003 in San Carlos, California in the United States (Teslamotors.com, 2014). The company had its headquarters in Palo Alto and at the time of its inception, Elon Musk was its chief executive officer (CEO) (Hunger, 2010).
are ever increasing. Contrary to the popular myth that private equity firms weaken companies by
The essentials of IPOing in Japan are the same as they in the U.S. A company must select an underwriter to take charge of their IPO, that underwriter will then oversee the pricing, quantity, and actual sale of the stock. Once the sale is complete the proceeds will be transferred to the issuer. Stock listed on Japanese exchanges are divided into sections. The first two sections make up what are called the “Main Markets”, this is where the leading large and second tier Japanese and foreign companies are listed. The first of the two sections is especially view as top market for its size, liquidity, and the volume of foreign investors (Japan Exchange Group), while the second is for medium sized companies. The third section is called the Market of The High-growth and Emerging Stocks or (MOTHERS), a trading market for companies with high growth potential. What
There are several external growth methods that entrepreneurs may choose for growing their business which are ‘a merger with’ or ‘acquisition of’ other companies.