Mingsheng Li, Steven Xiaofan Zheng and Melissa V. Melancon
To test the effects of underpricing and share retention (i.e. the proportion of shares retained by the pre‐initial‐public‐offering (IPO) owners) on IPO aftermarket liquidity.
Abstract
Purpose
To test the effects of underpricing and share retention (i.e. the proportion of shares retained by the pre‐initial‐public‐offering (IPO) owners) on IPO aftermarket liquidity.
Design/methodology/approach
Uses both percentage spread and turnover ratio to measure liquidity. The percentage spread is the quoted bid‐ask spread divided by the quoted midpoint and measures the trading cost relative to share price. Turnover ratio is the daily trading volume divided by the number of shares offered and measures the speed of transaction. Both non‐parametric analyses and multiple regressions are conducted to investigate the effects of underpricing and share retention on liquidity.
Findings
Results indicate that initial return is positively related to turnover ratio and negatively related to percentage spread. These relations are significant even after controlling for other factors. Also finds that the pre‐IPO owners’ retention rate is positively related to turnover ratio and negatively related to percentage spread. High retention rates attract more trades, provide quality assurance, and improve IPO aftermarket liquidity.
Originality/value
This paper investigates the theoretical links between underpricing and liquidity and provides direct evidence on Booth and Chua's liquidity theory. In addition, this is one of the first empirical studies to analyze the effect of share retention on aftermarket liquidity.
Vassilis Dalakas, Joanna Phillips Melancon and Izabela Szczytynski
Given the division between conservative and liberal ideologies on many issues, brands navigate social media minefields whenever they take a social or political stance. This study…
Abstract
Purpose
Given the division between conservative and liberal ideologies on many issues, brands navigate social media minefields whenever they take a social or political stance. This study aims to explore real-time social media consumer responses to eight US boycott threats, including both conservative-based and liberal-based calls for boycott.
Design/methodology/approach
A grounded theory analysis of approximately 800 tweets collected in the 24 h following each brand’s trigger event led to a framework of motivations for using social media to engage in boycott discussions over a brand’s political stance.
Findings
Eleven pro-boycott and 11 anti-boycott consumer profiles emerged across cases. Overarching motivations for pro- and anti-boycotters include a desire to cause/prevent change, seeking justice/fairness, self-enhancement and expression of hostility. Findings suggest that political consumerism occurs with differing motivations and varying levels of emotion, that brand defenders may lessen boycott effectiveness and that threats to boycott may not always translate to actual boycotts.
Originality/value
This paper explores actual consumer boycott calls from various industries as they unfolded in real-time, as opposed to other research that explores hypothetical boycotts or a single case study. Additionally, to the best of the authors’ knowledge, this work is among the first to explore how consumers enter the boycott conversation in defense of the brand and attempt to diffuse the call for a boycott.