Informational externalities of going public decisions: evidence from industrial sector

Theoretical models predict that going public firms generate positive externalities, creating a spillover effect for other firms to go public. In this paper, we posit that venture backed IPOs convey positive informational externalities for the publicly traded rival firms in the same industry and test three related hypotheses. The hypotheses are: 1) Venture backed IPOs convey positive information about industry and this information is transferred to rival firms; 2) Intra-industry information transfer varies with rivals\u27 characteristics; 3) IPO price revisions generate additional information that affects rivals\u27 valuation. The results show that rivals have positive valuation effects only in response to venture backed IPOs and no significant reaction in response to non-venture backed IPOs. We also find evidence that the effect on rival firms is stronger if they operate in low concentrated industries (i.e. high competition) and have low growth opportunities. The relative size of IPO firm seems to play an important role in the direction and magnitude of industry rivals\u27 valuation effects. Negative information revealed in the form of downward price revisions adversely affect rival firms\u27 valuation

Globalization and Financial Regulation

There has been no shortage of villains in the financial crisis which began in Asia and has now encompassed all major emerging markets: bankers regulators hedge funds and the IMF have all been excoriated for incompetence and immorality. This paper argues that the problems which have emerged from the crisis are structural i.e. they arise from the very nature of financial activity. While the structural problems have been present from the beginnings of finance the advance of technology and of globalization has so exacerbated the problems as to undermine the foundations of the international market order. To highlight the structural nature of the problems this paper will eschew the search for villains and examine the theoretical basis for the globalization of financial markets - the major direction of their recent evolution. Economic theory identifies major difficulties in the presumption that this drive will lead to socially desirable outcomes. The financial crisis can be understood as the exacerbation of these difficulties by globalization and the advance of information technology

Essays in corporate finance and financial institutions

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2006."June, 2006."Includes bibliographical references.Chi: Subsidiary Debt, Capital Structure, and Internal Capital Markets I investigate external subsidiary debt financing and its implications for internal capital markets. I find that firms tend to finance business segments with subsidiary debt when those segments have better investment opportunities than the rest of the firm, and such debt tends to be parent-guaranteed. I also find that having such debt outstanding significantly reduces the effect of a segment's cash flow on the capital expenditures of other segments. These findings suggest that firms use subsidiary debt to protect their stronger segments from the underfunding or "poaching" problems modeled in theories of internal capital markets. In addition, I find that firms use subsidiary debt for reasons related to traditional capital structure concerns. Ch2: Is the Chinese Wall too High? I test whether new regulatory restrictions on cooperation between analysts and investment bankers adversely affect equity research coverage. Contrary to the hypothesis, I find that firms engaging in SEO's enjoy just as large an increase in analyst coverage in the post-regulatory period as they do in the pre-regulatory period.(cont.) In addition, while I find that analyst coverage in the post regulatory period significantly declines for new IPOs, it declines by an equal amount for a control group of comparable firms that pay no such fees. Making the identifying assumption that any adverse consequences of the new restrictions should be larger for IPO's, I conclude that the restrictions have no adverse impact on analyst coverage. Ch3: Investment Banking and Analyst Objectivity' This chapter uncovers evidence that conflicts of interest arising from M&A advisory relations influence analysts' recommendations, corroborating regulators' and practitioners' suspicions on a topic not previously examined in the academic literature. In addition, the M&A context allows us to disentangle the conflict of interest effect from selection bias. We find that analysts affiliated with acquirer advisors upgrade acquirer stocks around M&A deals, even around all-cash deals, wherein selection bias is unlikely. Also consistent with conflict of interest, but not selection bias, target-affiliated analysts publish optimistic reports about acquirers after, but not before, the exchange ratio of an all-stock deal is set.by Adam C. Kolasinski.Ph.D

Financial Liberalization, International Monetary Dis/Order, and the Neoliberal State

This article started as a plenary paper that was presented to the annual International Economic Law conference of the American Society of International Law. The conference itself posed the question of whether the new international economic order was leading to greater peace, stability, fairness and justice. At a time when American post-Cold War triumphalism was perhaps at its zenith, Canova answered with an unequivocal indictment of the global order for failing to deliver peace or justice. The first part of the article critiques the international monetary system, and argues that the primary negative consequence of capital liberalization is the undermining of the public sector. Free portfolio capital flows constitute an undemocratic check on once-sovereign nation-states to pursue progressive social and economic policies. Neoliberal capital goes hand in hand with a neoliberal state with declining capabilities to provide for the public safety and general welfare. Part two of the article analyzes the relationship between central bank autonomy, another institutional pillar of the new world order, and questionable economic assumptions, dubious constitutional foundations, and flawed historical narratives that constrain discussion of alternative models. The final part of the article considers alternative futures and paths of globalization

Price momentum profitability in the US tech stock market

Trading momentum has been a highlighted theme during the last decades due to conflicting points of view within the academia and investment community. Despite the recurring studies regarding momentum, there are still no consensus about the significance of momentum returns neither about the causes behind it. In addition, the investor's community embraced the momentum effect which results in the creation of successive funds and Exchange-Traded-Funds (ETF) that follows momentum trading strategies. The aim of this paper is to observe the momentum effect in the United States Technological equity markets. This study looks at the 200 biggest tech firms in the United States, in the time-frame from 2008 to 2018, and finds empirical evidence of positive and significant momentum returns. Reasons for the observation of momentum returns might be explained by behavioural theories which theorize the effect of psychological biases in the investment decisions. The implication for this study aims to clarify the state of momentum trading strategies nowadays with tight focus on the tech industry.O momentum trading tem sido um tema em destaque nas últimas décadas devido a pontos de vista conflitantes dentro da comunidade académica e de investimentos. Apesar dos vários estudos acerca do tema, continua sem existir consenso em relação ao significado dos retornos do momentum e às causas por detrás desta anomalia. Adicionalmente, a comunidade de investidores adotou o momentum effect, o que se traduziu na criação de fundos e Exchange-Traded-Funds (ETF) que seguem as estratégias de momentum trading. O objetivo deste artigo é observar o momentum nos mercados de capitais no sector tecnológico dos Estados Unidos. Este estudo analisa as 200 maiores empresas de tecnologia nos Estados Unidos, entre 2008 e 2018, e encontra evidências empíricas de retornos positivos e estatisticamente significativos do momentum. As razões para a observação dos retornos de momentum podem ser explicadas por teorias comportamentais que teorizam o efeito de enviesamentos psicológicos nas decisões de investimento. A implicação para este estudo visa esclarecer a rentabilidade das estratégias de momentum trading, atualmente, com foco particular na indústria de tecnologia

Financial development and economic growth an overview of Turkish case: 1982–1999

This research focuses on financial development and economic growth with a qualitative assessment of the Turkish case between 1982 and 1999. The effect of financial development on economic growth has been examined in numerous studies throughout the modern history of economics. The dissenters and advocates contest both the theme and the empirical evidence extensively. The debate, to a certain extent, however is still inconclusive and incomplete. In essence, the diversity of variables, time discrepancies, sui generis country structures, measurement, statistical and conceptual drawbacks and finally differences in the level of financial development of different countries initiate questionable generalisations. [Continues.

Strategies on initial public offering of company equity at stock exchanges in imperfect highly volatile global capital markets with induced nonlinearities

This research considers the strategies on the initial public offering of company equity at the stock exchanges in the imperfect highly volatile global capital markets with the nonlinearities. We provide the IPO definition and compare the initial listing requirements on the various markets. We analyze the IPO techniques: the fixed-price offerings, auctions, book-building. We focus on the IPO initial underpricing, long-run performance and after market liquidity problems. 1. We propose that the information absorption by the investors occurs in the evolving learning process about the company’s value, taking to the consideration the fundamental purpose of investing and the responsibilities of investors. 2. We think that the information absorption capacity by the investors on the IPOs impacts the investor’s investment decisions and serves as a pre-determinant for the successful IPO deal completion. We propose the Ledenyov theory on the origins of the IPO underpricing and long term underperformance effects, which states that the IPO underpricing and long term underperformance can be explained by the changing information absorption capacity by the investors on the IPO value. 3. We think that the IPO winning virtuous investment strategies can only be selected by the investors with the highest information absorption capacity through the decision making process on the IPO investment choices at the selected stock exchange in the imperfect highly volatile global capital markets with the nonlinearities; applying the econophysical econometrical analysis with the use of the inductive, deductive and abductive logics in the frames of the strategic choice structuring process, that is the winning through the distinctive choices process

Foreign direct investment : its determinants and relevance to developing countries

This dissertation is divided into six chapters, as foHows: Chapter 1 of this dissertation discusses the growing significance of FDI for developing countries. It compares FDT in developed and developing countries and analyses recent evidence ofFDI flows to developing countries. Chapter 2 analyses the (endogenous and exogenous) detenninants ofFDI flows into developing countries. Chapter 3 discusses the importance of FDI flows, which are essential for new investments or for financing fortuitous deficits in host countries, and looks at the adjustment mechanisms for the equilibrium of the balance of payments. Chapter 4 gives attention to FDI flows, the liberalisation of financial markets and the financial account of the balance of payments in developing countries in providing more opportunities and mechanisms for development and economic growth. Finally, chapter S examines and compares FDI flows tu South Africa and Angola - the biggest FDI recipients on the African continent.EconomicsMCom (Economics