The University of Southampton
University of Southampton Institutional Repository

Equity offerings by firms that emerged from bankruptcy

Equity offerings by firms that emerged from bankruptcy
Equity offerings by firms that emerged from bankruptcy
Entrepreneurship is not only used to create a business idea, but also to restructure a business in response to environmental conditions. Firms that issue equity after emerging from bankruptcy are unique in that they exhibit less asymmetric information than other firms that issue equity. They were previously subject to the SEC disclosure requirements when they had publicly-traded securities, and were required to disclose information about their assets, liabilities, and governance while operating under Chapter 11 bankruptcy laws. Our analysis determines that the mean underpricing of the firms that engaged in public stock offerings after emerging from bankruptcy is 4.49 percent, while the mean underpricing for the traditional IPOs is 15.53 percent. A multivariate analysis reinforces the lower degree of underpricing of public offerings by firms that emerged from bankruptcy, while controlling for other characteristics that could affect the level of underpricing. We also find that the aftermarket stock price performance of the firms that emerged from bankruptcy is more favorable than that of traditional IPOs. All results are attributed to a lower degree of asymmetric information associated with public stock offerings by firms that emerge from bankruptcy
2373-1761
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4

Jory, Surendranath and Madura, Jeff (2007) Equity offerings by firms that emerged from bankruptcy. Journal of Entrepreneurial Finance, 12 (2).

Record type: Article

Abstract

Entrepreneurship is not only used to create a business idea, but also to restructure a business in response to environmental conditions. Firms that issue equity after emerging from bankruptcy are unique in that they exhibit less asymmetric information than other firms that issue equity. They were previously subject to the SEC disclosure requirements when they had publicly-traded securities, and were required to disclose information about their assets, liabilities, and governance while operating under Chapter 11 bankruptcy laws. Our analysis determines that the mean underpricing of the firms that engaged in public stock offerings after emerging from bankruptcy is 4.49 percent, while the mean underpricing for the traditional IPOs is 15.53 percent. A multivariate analysis reinforces the lower degree of underpricing of public offerings by firms that emerged from bankruptcy, while controlling for other characteristics that could affect the level of underpricing. We also find that the aftermarket stock price performance of the firms that emerged from bankruptcy is more favorable than that of traditional IPOs. All results are attributed to a lower degree of asymmetric information associated with public stock offerings by firms that emerge from bankruptcy

Full text not available from this repository.

More information

Published date: 2007
Organisations: Southampton Business School

Identifiers

Local EPrints ID: 394489
URI: http://eprints.soton.ac.uk/id/eprint/394489
ISSN: 2373-1761
PURE UUID: 36603dab-0558-40f6-b3ea-0a14bf31daf2
ORCID for Surendranath Jory: ORCID iD orcid.org/0000-0002-8265-0001

Catalogue record

Date deposited: 16 May 2016 08:58
Last modified: 21 Aug 2019 00:32

Export record

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×