IPO Valuation: The International Evidence

The Oxford Handbook of IPOs, Forthcoming

51 Pages Posted: 12 Feb 2019

See all articles by Sanjai Bhagat

Sanjai Bhagat

University of Colorado at Boulder - Department of Finance

Jun Lu

Central University of Finance and Economics (CUFE)

Srinivasan Rangan

Indian Institute of Management (IIMB), Bangalore

Date Written: December 2018

Abstract

We study the valuation of 6,199 IPOs during 1998-2015 for the following countries: Australia, Canada, China, Germany, India, Japan, U.K., and U.S. Net income is positively related to IPO valuation in each of the eight countries. The economic impact of net income is largest for Chinese IPOs and smallest for Australian IPOs. Book value is positively and significantly related to IPO valuation in only Canada, Germany, India, and U.S. Capital expenditure is significantly and positively related to IPO valuation in only Canada, Germany, India, U.K., and U.S. We find a positive and statistically significant relation between insider retention and IPO valuation only in China, Germany, U.K., and U.S.; positive but marginally significant relationship for India and Japan. Underwriter reputation has a positive and statistically significant relationship for IPOs only in China, Germany, India, U.K., and U.S. Net income is positively and statistically significantly related to IPO valuation during the years 1998-2015, and this relationship has strengthened over time. Capital expenditure is positively and significantly related to IPO value during 1998-2015, and this relation appears to be stable over time.

Keywords: IPO valuation, IPOs, international IPOs, insider retention

JEL Classification: G15, G24, G32

Suggested Citation

Bhagat, Sanjai and Lu, Jun and Rangan, Srinivasan P., IPO Valuation: The International Evidence (December 2018). The Oxford Handbook of IPOs, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3327540 or http://dx.doi.org/10.2139/ssrn.3327540

Sanjai Bhagat (Contact Author)

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States
303-492-7821 (Phone)

Jun Lu

Central University of Finance and Economics (CUFE) ( email )

Beijing, Beijing
China

Srinivasan P. Rangan

Indian Institute of Management (IIMB), Bangalore

Bannerghatta Road
Bangalore, Karnataka 560076
India

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