The price of rapid exit in venture capital-backed IPOs

This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during “hot issue” periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non-venture capital backed IPOs during normal periods of activity, but the reverse is true during hot issue periods: VC backed IPOs are more underpriced than non-VC backed ones. This paper shows that when IPOs are driven by the initial investor’s desire to exit from an existing investment in order to finance a new venture, both the value of the new venture and the value of the existing firm to be sold in the IPO drive the investor’s choice of price and fraction of shares sold in the IPO. When this is the case, the availability of attractive new ventures increases equilibrium underpricing, which is what we observe during hot issue periods. Moreover, I show that underpricing is affected by the severity of the moral hazard problem between an investor and the firm’s manager. In the presence of a moral hazard problem the degree of equilibrium underpricing is more sensitive to changes in the value of the new venture. This can explain why venture capitalists, who often finance firms with more severe moral hazard problems, underprice IPOs less in normal periods, but underprice more strongly during hot issue periods. Further empirical implications relating the fraction of shares sold and the degree of underpricing are presented

Signaling by Underpricing the Initial Public Offerings of Primary Listings in an Emerging Market

The signaling hypothesis suggests that firms have incentives to underprice their initial public offerings (IPOs) to signal their quality to the outside investors and to issue seasoned equity (SEO) at more favorable terms. While the initial empirical evidence on the signaling hypothesis was weak, Francis et al. (2010) show that foreign firms from segmented (rather than integrated) markets strategically underprice their IPO in U.S. markets to distinguish themselves from the weaker players. Hence, the attractiveness of the signaling strategy seems to be related to the a priori level of information asymmetry. We examine the use of signaling in an emerging market where the information asymmetry is likely to be higher relative to an established market. Using a sample of 158 Polish IPOs from 2005 - 2009, we show that firms that underprice their IPOs are more likely (i) to issue seasoned equity, (ii) to issue a larger portion of equity at the SEO, and (iii) to make the SEO sooner after the IPO, all of which are consistent with the signaling hypothesis. This evidence suggests that the results of Francis et al. (2010) are not limited to IPOs made by foreign firms in an established market, but they can be extended to primary listings by domestic firms in markets where the information asymmetry is sufficiently large for the benefit of the signal to outweigh its cost

Piezo is essential for amiloride-sensitive stretch-activated mechanotransduction in larval Drosophila dorsal bipolar dendritic sensory neurons

Date of Acceptance: 05/06/2015Peer reviewedPublisher PD

Arsenazo III-Ca2+. Effect of pH, ionic strength, and arsenazo III concentration on equilibrium binding evaluated with Ca2+ ion-sensitive electrodes and absorbance measurements.

Equilibrium binding properties of the metallochromic indicator Arsenazo III (AIII) were characterized by Ca2+ and acid/base titration. Free calcium was measured directly with Ca2+ ion-sensitive electrodes. Absorbance changes were measured by both a conventional scanning spectrophotometer and a dual wavelength spectrophotometer. Acid/base titration of AIII in conjunction with Ca2+ ion-sensitive electrode measurement and absorbance changes indicate that pH can change AIII absorbance through a change of the K(D) for Ca-AIII formation, and, in addition, that there is a pH-specific component that is not dependent on Ca-AIII formation. THe dissociation constant (K(D)) of AIII varied not only with pH, but with ionic strength and AIII concentration. Studies conducted to examine AIII-Ca stoichiometry resulted in different initial conclusions, depending on the method of analysis. Log delta A-log AIII relations were in accord with previously published results, which indicate that more than one AII binds to one Ca2+ ion. But Job plots. Scatchard analysis, and Hill plots all indicated 1:1 binding. THe method of absorbance measurement, i.e., scanning or dual wavelength did not influence the results. these findings were reconciled on the basis of changes in K(D) with AIII concentration and ionic strength. In 200 mM KCl, K(D) of AIII-Ca varies by a factor of 7 between 10(-4.3) and 10(-3) M AIII. Thus, a disproportionately large amount of Ca-AIII is formed as AIII concentration is increased, which results in slopes greater than unity for log delta A-log AIII relations