International IPO Markets and a Foreign IPO Puzzle

45 Pages Posted: 4 Jun 2014 Last revised: 1 Jul 2014

Gonul Colak

Hanken School of Economics

Candace Jens

Tulane University - A.B. Freeman School of Business

April M. Knill

Florida State University College of Business; Florida State University - College of Law

Kelsey Lynne Syvrud

Florida State University; University of South Florida - Department of Finance

Date Written: January 15, 2014

Abstract

We analyze a firm’s decision to conduct initial public offerings (IPOs) internationally. Global IPOs (issuing both domestically and abroad) raise significantly more capital in the international markets than any other form of IPO. Though over eight percent of firms conducting an IPO between 1995 and 2010 choose to conduct Foreign IPO (issuing only abroad), this form of IPO fails to raise significantly more proceeds than matching IPOs with similar firm characteristics. This constitutes a “Foreign IPO Puzzle.” We consider several explanations for this puzzle. Our results are consistent with firms attempting to take advantage of hotter IPO markets, more efficient pricing, better legal environment, better opportunities for a subsequent SEO, and stronger currencies. None of these hypotheses fully explains away this puzzle.

Keywords: initial public offerings, international, legal bonding, underpricing

JEL Classification: F30, G32

Suggested Citation

Colak, Gonul and Jens, Candace and Knill, April M. and Syvrud, Kelsey Lynne, International IPO Markets and a Foreign IPO Puzzle (January 15, 2014). Available at SSRN: https://ssrn.com/abstract=2446039 or http://dx.doi.org/10.2139/ssrn.2446039

Gonul Colak (Contact Author)

Hanken School of Economics ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland

Candace Jens

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

April M. Knill

Florida State University College of Business ( email )

Tallahassee, FL 32306-1042
United States
(850) 644-2047 (Phone)

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

Kelsey Lynne Syvrud

Florida State University ( email )

Tallahasse, FL 32306
United States

University of South Florida - Department of Finance ( email )

Tampa, FL 33620-5500
United States

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