Valuing local and dual-class IPOs in the Alternative Investment Market

Abstract: Initial Public Offerings are, by definition, not seasoned securities. They have not been subjected to valuation by the community of investors. It is often difficult or impossible to forecast their future cash flows because most do not have a long history of publicly disclosed financial inf...

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Autores principales:	Wahid,Abdul, Mumtaz,Muhammad Zubair, Mantell,Edmund
Lenguaje:	English
Publicado:	Universidad de Chile. Departamento de Economía 2020
Materias:	Valuation of IPOs AIM Dual-class IPOs LASSO regression Extreme Bounds Analysis
Acceso en línea:	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862020000200245
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spelling	oai:scielo:S0718-528620200002002452020-12-28Valuing local and dual-class IPOs in the Alternative Investment MarketWahid,AbdulMumtaz,Muhammad ZubairMantell,Edmund Valuation of IPOs AIM Dual-class IPOs LASSO regression Extreme Bounds Analysis Abstract: Initial Public Offerings are, by definition, not seasoned securities. They have not been subjected to valuation by the community of investors. It is often difficult or impossible to forecast their future cash flows because most do not have a long history of publicly disclosed financial information. Consequently, valuing IPOs in any market is more difficult than valuing seasoned equities. In this paper, we address the valuation of IPOs in the Alternative Investment Market, (hereafter the AIM.) The purpose of this study is to determine the observable factors that affect valuation in the AIM. We apply OLS, LASSO regression, and Extreme Bounds Analysis (EBA) techniques on historical accounting data to test our theory of valuation. The statistical sample consists of 2,185 IPOs issued on the AIM between 1995 and 2020. Our findings suggest that the market valuation of IPOs in the AIM is systematically related to a multiplicity of factors. These include earnings per share (EPS) in the after-market, operating cash follow per share, and the percentage of shares issued to the public. The findings of the study have a practical value for investors who are interested in buying IPOs in the AIM.info:eu-repo/semantics/openAccessUniversidad de Chile. Departamento de EconomíaEstudios de economía v.47 n.2 20202020-12-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862020000200245en10.4067/S0718-52862020000200245
institution	Scielo Chile
collection	Scielo Chile
language	English
topic	Valuation of IPOs AIM Dual-class IPOs LASSO regression Extreme Bounds Analysis
spellingShingle	Valuation of IPOs AIM Dual-class IPOs LASSO regression Extreme Bounds Analysis Wahid,Abdul Mumtaz,Muhammad Zubair Mantell,Edmund Valuing local and dual-class IPOs in the Alternative Investment Market
description	Abstract: Initial Public Offerings are, by definition, not seasoned securities. They have not been subjected to valuation by the community of investors. It is often difficult or impossible to forecast their future cash flows because most do not have a long history of publicly disclosed financial information. Consequently, valuing IPOs in any market is more difficult than valuing seasoned equities. In this paper, we address the valuation of IPOs in the Alternative Investment Market, (hereafter the AIM.) The purpose of this study is to determine the observable factors that affect valuation in the AIM. We apply OLS, LASSO regression, and Extreme Bounds Analysis (EBA) techniques on historical accounting data to test our theory of valuation. The statistical sample consists of 2,185 IPOs issued on the AIM between 1995 and 2020. Our findings suggest that the market valuation of IPOs in the AIM is systematically related to a multiplicity of factors. These include earnings per share (EPS) in the after-market, operating cash follow per share, and the percentage of shares issued to the public. The findings of the study have a practical value for investors who are interested in buying IPOs in the AIM.
author	Wahid,Abdul Mumtaz,Muhammad Zubair Mantell,Edmund
author_facet	Wahid,Abdul Mumtaz,Muhammad Zubair Mantell,Edmund
author_sort	Wahid,Abdul
title	Valuing local and dual-class IPOs in the Alternative Investment Market
title_short	Valuing local and dual-class IPOs in the Alternative Investment Market
title_full	Valuing local and dual-class IPOs in the Alternative Investment Market
title_fullStr	Valuing local and dual-class IPOs in the Alternative Investment Market
title_full_unstemmed	Valuing local and dual-class IPOs in the Alternative Investment Market
title_sort	valuing local and dual-class ipos in the alternative investment market
publisher	Universidad de Chile. Departamento de Economía
publishDate	2020
url	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862020000200245
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Valuing local and dual-class IPOs in the Alternative Investment Market

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