Initial Public Offerings and the Firm Location

The firm geographic location matters in IPOs because investors have a strong preference for newly issued local stocks and provide abnormal demand in local offerings. Using equity holdings data for more than 53,000 households, we show the probability to participate to the stock market and the proportion of the equity wealth is abnormally increasing with the volume of the IPOs inside the investor region. Upon nearly the universe of the 167,515 going public and private domestic manufacturing firms, we provide consistent evidence that the isolated private firms have higher probability to go public, larger IPO underpricing cross-sectional average and volatility, and less pronounced long-run under-performance. Similar but opposite evidence holds for the local concentration of the investor wealth. These effects are economically relevant and robust to local delistings, IPO market timing, agglomeration economies, firm location endogeneity, self-selection bias, and information asymmetries, among others. Findings suggest IPO waves have a strong geographic component, highlight that underwriters significantly under-estimate the local demand component thus leaving unexpected money on the table, and support state-contingent but constant investor propensity for risk

Geography stupid! A note on the credit crunch

There is no abstract for this paper.

Finance at the crossroads: geographies of the financial crisis and its implications

There is no abstract for this paper.

Change in the German model of corporate governance: evidence from blockholdings 1997 - 2001

In order to research the dynamics of the German model of corporate governance, data pertaining to major holdings of voting rights in listed companies between 1997 and 2001 were examined. The change that took place in this short period of time is striking, with a falling level of ownership concentration, dissolving cross-holdings, and financial sector institutions losing their position as blockholders. The concentration of voting rights is lowest in companies included in the DAX30 stock-market index. Factors affecting the types of holders of voting rights in a company include the company size, age, economic sector, and location. The analysis shows that Germany made a quick step towards some aspects of the Anglo-American system of corporate governance. However, there are also areas of strong persistence of the German model. In addition, I show that the German model is far from uniform, with different types of companies and different regions demonstrating a variety of corporate governance arrangements as well as distinctive development trajectories.

Global standards and emerging markets: the institutional-investment value chain and the CalPERS investment strategy

Institutional investors, particularly pension funds, based in developed Anglo-American capital markets are increasingly investing in international markets, including emerging markets, in an effort to capitalize on the rapid growth rates of these markets. But investment in far-flung jurisdictions carries with it risk and uncertainty, particularly when the corporate standards of firms in emerging markets are below those found in these investors’ home countries. In order to mitigate the risks posed by poor corporate standards of behaviour, institutional investors increasingly apply nonfinancial criteria not only to individual firms in emerging markets, but to the corporate practices of whole countries. Though countries and their regulatory regimes are central to external capital-investment decisions, we find convergence to global standards occurs when key actors in the investment value chain demand levels of corporate and social behavior greater than those currently consistent with countries’ own regulatory frameworks. We test this hypothesis using the decision of the California Public Employees Retirement System to screen out several emerging-market countries from their investment portfolio on the basis of a variety of nonfinancial criteria.