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IPOs, ownership structure and value creation: comparative study between Euro.NM and NASDAQ

Thesis

French

ID: <http://hdl.handle.net/2078.1/4832>

Abstract

IPO, in English: Initial Public Offering (IPO) is a major step in a company’s life. Well prepared and timely decided, the introduction not only makes it possible to find additional capital and diversify the company’s sources of financing, but also to gain national and international awareness and credibility. Research is part of a wide range of economic thinking that focuses on corporate governance. It aims to present IPOs on the different segments of Euro.NM between 1997 and 1999 and compares them with similar NASDAQ transactions. It also analyses their costs, which can be divided into explicit and implicit costs. Explicit costs relate to the remuneration of financial intermediaries, communication campaigns, etc.; as a general rule, they account for less than 1 % of the market capitalisation of the companies studied. Research focuses on implicit costs related to undervaluation of securities at introduction, i.e. the difference between the equilibrium price and the price paid by investors at the time of introduction. Theoretical models only partially explain the existence of such undervaluation. The thesis addresses in turn four themes: (I) the initial undervaluation of IPOs; (II) the ownership structure; (III) the liquidity of these operations and (iv) the long-term (three-year) stock market performance after the IPO. Our empirical results confirm and prolong the results achieved in Anglo-Saxon markets. They can be summarised in six main points: (1) the undervaluation of IPOs on Euro.NM is on average higher than that of equivalent NASDAQ transactions; (2) the original shareholders of Euro.NM companies play a more important role in the IPO by offering more securities than those of the NASDAQ; (3) financial markets adjust valuation errors from the first trading day; (4) the initial undervaluation of an introductory offer may help stabilise the ownership structure after the introduction of: this means that large investors are discriminated against in the capital allocation process; (5) a deterioration is observed in the performance of the companies studied by the NASDAQ, while in our sample Euro.NM there is a significantly positive long-term stock market performance; finally, (6) it appears that companies with the largest share of the capital “held” by the original shareholders do not seem to be performing better in the long term than others.

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