Dimitrios Gounopoulos

Global shipping IPOs performance

We analyze the short and long-run price performance of 143Global Shipping IPOs listed during the 1984-2007 period in major Stock Exchanges computing buy and hold abnormal returns (BHAR) and cumulative abnormal returns (CAR). We find average underpricing for shipping IPOs is 17.69%. The light underpricing is positively related to the age of the firm, the reputation of the stock exchange they reach listing and the market condition of the period they go public and negatively related to the reputation of the underwriters. In the long-run, Shipping IPOs underperform after five months holding period. Specifically using the buy-and hold returns as a measurement for long-run performance, we find that investors who buy immediately after listing and hold shares for three years will make a loss of 15.72%. The survey suggests that global shipping industry surprises us regarding the maturity in the behavior of its investors.

Explaining house price changes in Greece

This article develops an equilibrium model for the Greek housing market that incorporates both macroeconomic and country-specific variables that affect demand for and supply of houses. In the overall upward phase of the 26-year period examined (1985Q1–2010Q4), our investigation of short-term fluctuations in real house prices and stock prices confirms the inverse relationship between movements in the housing price index and the stock exchange general index, identifies the direction of causality as running from the financial sector to the real sector and finds that, following an exogenous shock, reversion to the long-run equilibrium is a rather slow process. Furthermore, we identify a fundamental shift in the behaviour of Greek homeowners, who appear to be moving away from the treatment of housing as consumption good, towards treating house purchases as investment.

IFRS Adoption and Management Earnings Forecasts of Australian IPOs

We find evidence that the adoption of International Financial Reporting Standards (IFRS) improves corporate disclosure. Specifically, we document that forecast errors of the predicted earnings issued during the Initial Public Offering (IPO) have significantly reduced in Australia following the mandatory implementation of IFRS in 2005. The evidence further suggests that managers are more likely to release IPO earnings forecasts towards conservatism in post-IFRS periods. We argue that IFRS enables investors better evaluate IPO firms’ performance and demand higher returns from firms which reported inflated and inaccurate earnings forecasts. Our evidence shows that over-optimistic earnings forecasts and larger forecasting errors results in greater underpricing under the IFRS regime. Overall, this study confirms that IFRS is a set of high-quality accounting standards which improve the information environment and accounting quality.

Prediction of distress and identification of potential M&As targets in UK

Purpose - The purpose of this paper is to identify financial characteristics that assess and predict corporate financial distress in publicly traded firms quoted in the London Stock Exchange. Design/methodology/approach - The model incorporates three existing literatures as an alternative to bankruptcy. The model has two stages: the first stage discriminates financially healthy or distressed firms utilizing binary logit regression. The second stage makes use of the univariate analysis. Firms can be further categorized into four possible outcomes: financially healthy, potentially healthy targets and financially distressed and potentially distressed acquisition targets. Findings - It was found that financial distress could be identified as early as three years prior to the event. Moreover, statistically significant differences were found between the four firm sample groups. Research limitations/implications - The vast changing environment and the financial crisis highlight the need for future research on the world trade implications, as well as the individual macroeconomic variables of each country. Originality/value - This is the first time a UK study makes use of this model in order to follow the hazard models procedure based on recent financial data. Due to the scope of the analysis, a new version of the latter procedure is employed. A further innovation that makes the model unique is its ability to classify a firm into one of several a priori groupings according to the latters individual characteristics. This overcomes the limitation of earlier studies that only considered two possible outcomes for firms.

Development in financial markets and the performance of German IPOs

By using an expanded sample of German IPOs listed between 1992 and 2012 covering two major amendments on the financial market, IFRS adoption and the recent financial crisis. Their results indicate that IFRS adoption has reduced underpricing in Germany and has significantly affected their long-term performance. This clearly suggests the advantages of preparing IFRS accounts which might be an incentive for private companies to use IFRS voluntarily. Similarly firms that have gone public during the recent financial crisis offered significantly less initial returns to their aftermarket investors.

Flipping activity in fixed offer price mechanism allocated IPOs

Publisher Summary This chapter studies the phenomenon of flipping, that is the liquidation of an initial public offering (IPO) in the first 2–3 days of trading, in the immediate aftermarket. The trading behavior of all investors in 51 IPOs that took place from January 2000 to December 2000 with a fixed offer price mechanism is investigated. Electronic share settlement records are accessed for each company to investigate whether initial subscribers flip their shares during the first 2 days of trading and whether this flipping behavior relates to issuer, shareholder, underwriter, and market characteristics. On average, flipping accounts for only 37.67% of trading volume and 24.30% of shares offered during the first 2 days of trading. Institutions do more flipping than retail investors and cold IPOs are flipped much more than hot IPOs. Firms newly listed by reputable underwriters surprisingly present high flipping at 43.5%, while less reputable banks and syndicates show 34.1% flipping activity for their IPOs. The chapter presents a model of the flipping behavior in terms of share allocation, which shows that institutional investors optimally choose to flip more in larger IPOs. Market classification is a factor that affects flipping activity as institutional investors prefer to flip more in IPOs of secondary (parallel) markets. In this model no significant flipping activity by retail investors is found.

Assessing the effects of unconventional monetary policy on pension funds risk incentives

US public pension funds deficits remain stubbornly high even though market conditions have improved in the post-crisis period. This article examines the role of lower short- and long-term interest rates imposed by the use of unconventional monetary policy on pension funds risk taking and asset allocation behavior. We quantify the effects of the Zero Lower Bound policy and the launch of unconventional monetary policy measures by using two structural Vector AutoRegression (VAR) models, a Bayesian VAR and a Markov switching-structural VAR. We provide the first comprehensive evidence showing that persistently low interest rates and falling Treasury yields cause a substantial increase in pension funds risk and portfolios beta. Additionally, we document that the severe funding shortfall in many pension schemes is, to a large extent, associated with and prompted by changes in the monetary policy framework.

Do IPOs Performance Signal Future Stock Issuance

This study empirically examines the effect of initial public offering (IPO) issuance on seasoned equity offering (SEO) decisions and the impact of state-owned enterprises (SOEs) in China. Results indicate that specific IPO characteristics, corporate governance issues, and firm-specific factors determine the timing and size of an SEO. Findings reveal that a higher level of IPO underpricing leads firms to issue SEOs sooner with larger proceeds. The connections between IPOs and SEOs become less apparent in state-controlled firms. There are two major implications. First, firms can use IPO underpricing to obtain larger SEOs sooner in the presence of asymmetric information. Second, state control interferes with the pattern of firms raising capital from the Chinese stock markets.

Innovation and Upheaval: Early Growth in the Greek Capital Market: Listings and IPOs from 1880 to WWII in ASE

The establishment and growth of the Greek stock market were coincident with development episodes, financial upheavals, and geographic expansions of the countrys economy over the period 1880–1940. This article explores the growth of the Athens Stock Exchange through new listings and initial public offerings (IPOs) in the late nineteenth and early twentieth centuries. We examine changes in exchange governance and listing requirements. On a theme not addressed before, we find that simple listings were far more numerous than actual IPOs. IPOs in Greece remained unregulated throughout the period. Their under-pricing became pronounced in the later parts of the period, especially the 1920s. The study presents data on ‘quasi-IPOs’ (that is, capital increases shortly after listing) and shows that they offer a more accurate assessment of the demand for the financing of listing firms in an emerging market. Robust evidence is presented to show that as the Exchange developed it also underwent a change in character, becoming more oriented to the domestic market and catering to smaller firms in domestic manufacturing in the post-First World War era that marked the end of early globalization.

Innovation and upheaval: early growth in Greek capital market listings and IPOs from 1880 to the Second World War in the Athens Stock Exchange†

The establishment and growth of the Greek stock market were coincident with development episodes, financial upheavals, and geographic expansions of the countrys economy over the period 1880–1940. This article explores the growth of the Athens Stock Exchange through new listings and initial public offerings (IPOs) in the late nineteenth and early twentieth centuries. We examine changes in exchange governance and listing requirements. On a theme not addressed before, we find that simple listings were far more numerous than actual IPOs. IPOs in Greece remained unregulated throughout the period. Their under-pricing became pronounced in the later parts of the period, especially the 1920s. The study presents data on ‘quasi-IPOs’ (that is, capital increases shortly after listing) and shows that they offer a more accurate assessment of the demand for the financing of listing firms in an emerging market. Robust evidence is presented to show that as the Exchange developed it also underwent a change in character, becoming more oriented to the domestic market and catering to smaller firms in domestic manufacturing in the post-First World War era that marked the end of early globalization.