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The impact of institutions, ownership structure, business angels, venture capital and lead managers on IPO firm underpricing across North Africa

The impact of institutions, ownership structure, business angels, venture capital and lead managers on IPO firm underpricing across North Africa
The impact of institutions, ownership structure, business angels, venture capital and lead managers on IPO firm underpricing across North Africa

This paper examines the determinants of IPO underpricing in a unique and comprehensive, sample of 86 IPO firms from across North Africa between 2000 and 2013. The findings suggest that, underpricing is used as a mechanism by which to stimulate excess demand (subscription) for newly, issued stock in order to create a relatively small but highly dispersed, and thus disempowered, minority shareholder base. Domestic venture capital and to lesser extend business angels are, associated with elevated underpricing while the reputational impact from foreign venture capital and, lead managers infers lower underpricing. In terms of institutions and state-level corruption control, policies are most closely linked to substantial reductions in underpricing.

Agency theory, Business angels, North Africa, Private equity
1042-444X
19-42
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2

Hearn, Bruce (2014) The impact of institutions, ownership structure, business angels, venture capital and lead managers on IPO firm underpricing across North Africa. Journal of Multinational Financial Management, 24 (1), 19-42. (doi:10.1016/j.mulfin.2013.12.002).

Record type: Article

Abstract

This paper examines the determinants of IPO underpricing in a unique and comprehensive, sample of 86 IPO firms from across North Africa between 2000 and 2013. The findings suggest that, underpricing is used as a mechanism by which to stimulate excess demand (subscription) for newly, issued stock in order to create a relatively small but highly dispersed, and thus disempowered, minority shareholder base. Domestic venture capital and to lesser extend business angels are, associated with elevated underpricing while the reputational impact from foreign venture capital and, lead managers infers lower underpricing. In terms of institutions and state-level corruption control, policies are most closely linked to substantial reductions in underpricing.

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More information

Accepted/In Press date: 10 December 2013
e-pub ahead of print date: 17 December 2013
Published date: 2014
Keywords: Agency theory, Business angels, North Africa, Private equity

Identifiers

Local EPrints ID: 423339
URI: http://eprints.soton.ac.uk/id/eprint/423339
ISSN: 1042-444X
PURE UUID: 1cfb0dc2-df2b-4bff-b414-19f53d600064
ORCID for Bruce Hearn: ORCID iD orcid.org/0000-0001-9767-0198

Catalogue record

Date deposited: 20 Sep 2018 16:30
Last modified: 07 Aug 2019 00:22

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Author: Bruce Hearn ORCID iD

University divisions

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