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Article
Publication date: 3 April 2019

Thomas Heine Felix and Henk von Eije

The purpose of this paper is to analyze underpricing in initial coin offerings (ICO). It bridges the gap between findings in initial public offering (IPO) literature and empirical…

1811

Abstract

Purpose

The purpose of this paper is to analyze underpricing in initial coin offerings (ICO). It bridges the gap between findings in initial public offering (IPO) literature and empirical results from ICOs.

Design/methodology/approach

The sample set consists of 279 ICOs between April 2013 and January 2018. A regression analysis is performed with data from the ICOs.

Findings

The results show an average level of underpricing of ICOs of 123 percent in the USA and 97 percent in the other countries. The results for the US ICOs are significantly higher than for US IPOs on average and also higher than US IPOs at the beginning of the dot.com bubble. The authors also study the determinants of ICO underpricing. The authors use proxies based on asymmetric information from the IPO literature as well as ICO-related variables. First-day trading volume and a good sentiment on the ICO market go together with more ICO underpricing. Moreover, hot markets make first-day investors to benefit less. Finally, companies that use a large issue size or a pre-ICO (a sale of cryptocurrencies before the ICO) leave less money on the table.

Research limitations/implications

A first restriction is that the authors focus on ICOs and not on crowdfunding, though there are similarities in that both of them are novel ways to finance projects. A second restriction is that the authors had to decide on the definition of a listing day. Cryptocurrencies are traded on many exchanges, and if the exchange is tailored to the cryptocurrency itself, the data on, e.g., close prices are not necessarily to be trusted. The authors, therefore, decided to use close price data from coinmarketcap.com, which requires a listing on two exchanges. This choice implies that there may have been trades before the listing day itself. A third restriction arises from the relative newness of the ICO phenomenon. The authors gathered data on underpricing from coinmarketcap.com and combined that with project information from icobench.com. However, the data were not simply matched and they required manual adjustments based on several other sources. The authors hope that in due time data on ICOs will be as adequate as data on IPOs and that they become more readily available. It might help if regulators or the crypto community would institute publication requirements. Adherence to such requirements would also reduce the extent of fraud and of asymmetric information, so that solid issuers with good projects might benefit from less underpricing.

Practical implications

The research may help in reducing underpricing, as the authors find that issuers can reduce it by holding a pre-ICO and by considering larger issue sizes. If they do so, investors will get fewer opportunities to benefit from underpricing. Investors can, nevertheless, also profit from the knowledge generated in this paper. When market sentiment is positive and first-day trading volume is expected to be high, investing in ICOs is likely to give them higher first-day returns. Finally, the authors hope that this paper will serve as a basis for further research into the exciting and dynamic world of cryptocurrencies.

Originality/value

There is hardly any research on underpricing of ICOs. The paper is interesting for its table with a brief comparison of ICOs and IPOs. It also searches for variables from the asymmetric information theory behind IPOs to be applied in explaining ICOs. It shows high levels of ICO underpricing in comparison to IPOs. It also gives suggestions for issuers of (and investors in) ICOs.

Details

Managerial Finance, vol. 45 no. 4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 January 2004

J.H. von Eije, M.C. de Witte and A.H. van der Zwaan

Mainstream literature on long‐term performance of initial public offerings focuses on long‐term underperformance. Because underperformance is an anomalous phenomenon, many authors…

856

Abstract

Mainstream literature on long‐term performance of initial public offerings focuses on long‐term underperformance. Because underperformance is an anomalous phenomenon, many authors search for explanations based on financial market imperfections. More recently, however, the attention shifts from underperformance to long‐term performance in general. This induces the search for other than financial market imperfections in explaining under‐ or outperformance. This article presents the idea that in many companies the preparation for the IPO and the IPO itself may bring organizational change. It searches for IPO‐related organizational change in The Netherlands with interviews of Dutch corporate officers. The research shows that an IPO primarily changes financial management and financial reporting, but that other types of organizational change may also be relevant. Moreover, long‐term stock market performance was on average higher in companies where IPO‐related organizational changes were reported than in companies where the changes were not reported.

Details

Managerial Finance, vol. 30 no. 1
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 March 2002

A.H. van der Zwaan, J.H. von Eije and M.C. de Witte

In a sample of 28 Dutch IPOs we looked for the organizational and human resource changes that accompany the transformation from a private into a public firm. We observed a growing…

1125

Abstract

In a sample of 28 Dutch IPOs we looked for the organizational and human resource changes that accompany the transformation from a private into a public firm. We observed a growing efficiency climate and accountability drives, as well as a relationship between financial participation and performance, as recent literature seems to imply. This suggests that HR and IPO are related to each other, under the transparency and accountability imperatives that accompany IPOs. In contrast to most other IPO studies, the average Dutch case featured over‐ instead of under‐performance during the first few years after quotation.

Details

International Journal of Manpower, vol. 23 no. 2
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 18 November 2019

Atul Shiva and Manjit Singh

The purpose of this paper is to study the individual investors’ preferences towards stock selection in social media environments. The study is conducted to understand the…

996

Abstract

Purpose

The purpose of this paper is to study the individual investors’ preferences towards stock selection in social media environments. The study is conducted to understand the implications and conceptual directions for the corporates and financial advisors to understand the choices of individual investors applied in financial markets. Further, this study aims to examine the selection of the most preferred social media platform and behavioral intentions of investors towards selection of investment portfolios in Indian stock markets.

Design/methodology/approach

A questionnaire was designed based on the technique of conjoint analysis and was responded by 428 respondents belonging to the Northern region of India. The estimation of preference functions in Conjoint Analysis was designed by using orthogonal arrays and was calculated using the ordinary least square regression technique.

Findings

This study reveals that while making selection of desired investment portfolios, the investors give highest preference to social media platforms in terms of highest utility value and range followed by their preference for behavioral intentions to invest. Among different social media platforms, the investors preferred Twitter the most, followed by Facebook and the primary interest of investors was observed towards Intra-day trading purposes and balanced portfolio investments in financial markets. The major reason behind opting the social media platforms was selection of speculative stocks.

Research limitations/implications

The actual individual investment behavior cannot be observed through the survey, which limits the external validity of the study.

Practical implications

The paper presents a very important practical tool that can help financial advisors, opinion leaders and corporates in defining their target audience more sharply for investment-related advice. The findings revealed by the study will put them in a better position to understand how investors differ behaviorally and they will get acquainted with their choices and preferences while making investment decisions in the backdrop of social media environments. The preferences of the investors based on social media usage discovered by the study will not only enable the individual investors understand their own preferences, but those of the other investors as well in terms of planned investment decisions and choices.

Originality/value

The paper is a first of its kind to empirically identify the individual investors and their preferences and choices by applying conjoint analysis in the new social media environment. The study thus integrates the gap between marketing theories and emerging theories of behavioral finance to understand the investor behavior in a better way.

Details

Qualitative Research in Financial Markets, vol. 12 no. 1
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 1 October 2005

Wim Wester man and Henk von Eije

Liberalisation and deregulation of financial markets, lower currency volatility and the introduction of the euro have reduced transaction and bankruptcy costs for multinationals…

1742

Abstract

Liberalisation and deregulation of financial markets, lower currency volatility and the introduction of the euro have reduced transaction and bankruptcy costs for multinationals in Europe. Internal European transfers of cash have become easier and cheaper. This has enabled the centralisation of cash management activities. The centralisation at headquarters of multinational enterprises has also opened the road to financial disintermediation. These trends may have helped to create conglomerate benefits in Europe. The case of the cash management at the Netherlands‐based Royal Philips Electronics is used to illustrate these tendencies.

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Publication date: 19 February 2024

Quoc Trung Tran

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Abstract

Details

Dividend Policy
Type: Book
ISBN: 978-1-83797-988-2

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Article
Publication date: 1 April 2006

Henny van de Water and Jan de Vries

The purpose of this article is to address ways in which customer satisfaction could be improved.

2360

Abstract

Purpose

The purpose of this article is to address ways in which customer satisfaction could be improved.

Design/methodology/approach

In this article it is shown how the analytic hierarchy process (AHP) can be of use in making a choice between a number of alternative quality improvement projects. A case study performed in a large information technology oriented company illustrates that the model can play an important role in reaching a consensus about the ranking of quality management projects.

Findings

Results of the case study suggest that the AHP can strongly contribute to a more effective way of communicating and transforming knowledge between experts from different disciplines during quality improvement projects.

Originality/value

Based on this case study, it can be concluded that by means of the AHP model a rather simple method of making a decision regarding pilot projects related to quality improvement is available to companies. One final advantage of the AHP approach as experienced in the case study relates to the possibility to explore inconsistent judgements.

Details

International Journal of Quality & Reliability Management, vol. 23 no. 4
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 1 October 2005

Kojo Menyah

This paper outlines the theoretical models of international cash management and assesses their implications for corporate practice. Corporate practice is then reviewed through the…

3347

Abstract

This paper outlines the theoretical models of international cash management and assesses their implications for corporate practice. Corporate practice is then reviewed through the analysis of survey research and case studies. It emerges that whilst the implications of theoretical models are captured in essence by corporate practice, there is scant evidence of companies using sophisticated models in international cash management. The practice of international cash management is largely driven by developments in communications and computer technology, relaxation of regulatory and tax impediments, the internationalisation of banking and the development of new banking prod ucts. International treasurers may therefore be able to find appropriate cash management solutions to meet their business needs with the co‐operation of banks and technology providers. Further academic research should evaluate the extent to which corporate practice is consistent with extant multi‐currency balance and net work optimisation models and also explain why particular approaches to interna tional cash management persist in companies.

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Article
Publication date: 20 September 2011

Jaakko Aspara and Henrikki Tikkanen

The purpose of this paper is to contribute to the corporate marketing literature by examining how an individual's identification with a company influences their willingness to…

3023

Abstract

Purpose

The purpose of this paper is to contribute to the corporate marketing literature by examining how an individual's identification with a company influences their willingness to invest in the company's shares.

Design/methodology/approach

A set of hypotheses was developed, based on theory, and survey data were obtained from 440 individuals in order to test the hypotheses. The data pertained to the individuals' recent decisions to invest in particular companies' shares, and to the degree of their identification with the companies' identities. The analysis method was PLS path modelling.

Findings

First, an individual's identification with a company was found to have a positive effect on their determination to invest in the company's shares rather than in other companies' shares that have approximately similar expected financial returns/risks. Second, company identification was found to elicit preparedness to invest in the company's shares with lower financial returns expected from the shares than from other shares. Both influences were partly mediated by the individual's willingness to give support to a company with which they identify.

Research limitations/implications

The study pertains to company identification of individual investors; institutional (and professional) investors are beyond the scope of the paper. Also, the sample focuses on investors in a single country (Finland), and the data may involve some self‐reporting and retrospection biases.

Practical implications

Considering corporate marketing in the stock markets, individuals who identify with the company are identified as worthwhile targets when the company seeks to attract new investors.

Originality/value

The paper provides theoretical grounding for and empirical evidence of the positive influence of company identification on individuals' willingness to invest in companies' shares. It is a novel finding for corporate marketing literature that individuals express their identification with a corporate brand also through investing in its shares.

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Article
Publication date: 13 April 2010

Jaakko Aspara and Henrikki Tikkanen

The purpose of this paper is to examine the links between individual investors' subjective evaluations of certain companies' products and brands, on one hand, and their…

3121

Abstract

Purpose

The purpose of this paper is to examine the links between individual investors' subjective evaluations of certain companies' products and brands, on one hand, and their willingness and decisions to invest in those companies' stocks, on the other. The authors aim to challenge the traditional assumption that individuals would make stock investment decisions purely on the basis of expected financial returns and risks.

Design/methodology/approach

Survey data were collected from 293 individuals who invest in the stock market of a European country and analyzed with PLS path modeling.

Findings

In the clear majority of the consumers' stock investment decisions that were analyzed, the consumers exhibited some willingness to invest in a chosen stock beyond its expected financial returns/risk. Two variables are found to elicit willingness to invest in a company's stock beyond its financial returns: the personal relevance that the individual attaches to domains (activities or areas of interest; ideas or ideals) supported or represented by the company's products; and the individual's affective evaluation of the company's product brand.

Research limitations/implications

Replicating the study with different companies from different industries and with consumers from different countries will be important. Overcoming a potential retrospection bias in the reported study is also a task for further research.

Practical implications

The findings provide insights that can serve segmentation, targeting, and positioning when it comes to marketing a company in the stock market so as to attract investors.

Originality/value

The paper provides new evidence on the influence of product and brand evaluations in consumers' stock investment decisions – suggesting that positive product evaluations elicit extra willingness to invest in a company's stock, over and beyond its financial returns.

Details

International Journal of Bank Marketing, vol. 28 no. 3
Type: Research Article
ISSN: 0265-2323

Keywords

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