Initial Public Offerings 'IPOs', Underpricing & Performance: The Case of Top International Brands

Abstract

The study aims at investigating the relationship between Initial Public Offerings (IPOs) variables mainly underpricing on one hand, and the brand value measures on the other. Our final data set is 104 international brand companies. We implement empirical approach using hierarchal OLS regression and descriptive statistics. We show that underpricing is positively related to brand value which emphasizes the marketing role of going public and underpricing in enhancing brand equity through the product market, which additionally confirms some information asymmetry models. We also show that on average brand companies had not been recognized as brands at the IPO time. Moreover, we show the positive role of private equity in enhancing brand value, additionally, the non-linear association between underpricing and brand value is not evident. Finally, we draw some policy implication and suggestions for future research.

Keywords: IPOs, underpricing, private equity, brand value

JEL Classification: G24, M370