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* Information Revelation Theories:
To reduce this informational asymmetry, issuers tend to hire underwriters and to use a “Bookbuilding mechanism”. This common practice of Bookbuilding consists on setting a preliminary offer price range by the issuing firm, then the underwriter will take the role of trying to collect private information from investors about the offering which is called “indications […]
II-1-2\\ The investors are the most informed:
We are in the case of investors that are more informed than the other parties about the demand, the price they are willing to pay to acquire the IPO stocks, … Retour au menu : Investor Sentiment and Short Run IPO Anomaly: A Behavioral Explanation of Underpricing
II-1-1\\ The issuer is more informed than the investors: Welch (1989) and others assume that the issuer is better informed about its true value.
* The theory of signalling; Firm quality: The high quality issuers may attempt to signal their quality and their true value, and to distinguish themselves from the pool of low quality issuers, they voluntarily sell their shares at a lower price than the market beliefs. They leave deliberately money on the IPO table to deter […]
II-1\\ Asymmetric information:
The key parties to an IPO transaction are the issuing firm, the bank underwriting and marketing the deal, and investors. Asymmetric information models assume that one of these parties knows more than the others. Retour au menu : Investor Sentiment and Short Run IPO Anomaly: A Behavioral Explanation of Underpricing
II- Theoretical explanations of short run underpricing: A literature review
The research effort aimed at explaining the short run anomaly of the IPO market has provided numerous analytical advances and empirical insights, and a large list of explanations has been offered. Ibbotson (1975) is the first who offered a list of possible explanations for underpricing, many of which were formally explored by other authors in […]
I-4\\ A persistent anomaly in all industries:
Underpricing is also persistent for all the industries: automobile, banks, chemicals, construction, financial services, food and beverages, industrial, machinery, media, pharmaceutical and health, software, technology, telecommunications, transport and logistics … Every firm, which decides to go public, faces the phenomenon of underpricing, the price of shares the firm sells tends to jump substantially on the […]
I-3\\ A persistent anomaly in all countries:
Many researchers have been concentrated in studying the persistence of underpricing anomaly internationally. The underpricing phenomenon of Initial Public Offerings (IPOs) has been widely studied across different stock markets around the world and it is a persistent phenomenon all over the world. Loughran, Ritter and Rydqvist (1994)(2) documented that the underpricing anomaly exists in all […]
I-2\\ A persistent anomaly in time:
In the United States, at the end of the first day of trading, the shares traded on average at 18.9% above the offer price at which the company sold them (1990-2007). Underpricing has averaged 21.2% in the 1960s, 9% in the 1970s, and increasing from 7.8% in the 1980s to 14.4% in the 1990s and […]
I-1\\ Underpricing definition:
Before going in details, presenting the explanations advanced for the short run IPO anomaly, it is logical to begin by a definition of this notion of “underpricing” to understand this short run phenomenon: Early writers that have been interested in IPO market, notably Stoll and Curley (1970), Logue (1973), Reilly (1973) and Ibbotson (1975), are […]
I- Underpricing anomaly: a persistent phenomenon that characterizes IPO market
Retour au menu : Investor Sentiment and Short Run IPO Anomaly: A Behavioral Explanation of Underpricing
Section 1- Short run IPO anomaly and traditional explanations
Introduction: The underpricing is a short run anomaly characterizing the IPO market. This phenomenon has inspired a large theoretical literature over decades trying to give a relevant and a convincing explanation to this first day phenomenon. Underpricing anomaly has intrigued academics and practitioners over the past three decades and has generated considerable research aimed at […]
INTRODUCTION
Going public constitutes a real driver for the development of a company, enabling it to increase its equity capital and to overcome the constraint that its founders are no longer able to provide the capital needed for its expansion, and enabling it to diversify its sources of financing without the need for debt. It is […]
Abstract
Underpricing phenomenon has intrigued academics and practitioners over the past three decades, and has generated considerable research trying to clarify and to understand this short run puzzle: asymmetric information theories, IPO market efficiency theories and behavioral and sentiment approach. In this study, I regroup in the same model the most important explanations advanced earlier to […]
Analyzing the influence of new media on newspapers businesses in Switzerland, the role of the government and the future of both media
Analyzing the influence of new media on newspapers businesses in Switzerland, the role of the government and the future of both media
Auteur : Nicolas REICHEN
Superviseur : Prof. Dr. Bertil Cottier
Année de publication : 2011
Année universitaire : 2010-2011
Università della Svizzera italiana
Faculty of Communication Sciences
10. Bibliography
Books: Bénilde (2007) ; On achète bien les cerveaux : la publicité et les médias ; Editions Raisons d‟agir Breton and Proulx (2002) ; L’explosion de la communication. Introduction aux théories at aux pratiques de la communication ; La Découverte Cornu (2009) ; Journalisme et vérité. L’éthique de l’information au défi du changement médiatique ; […]
9. Conclusions
Internet has changed a lot of things when it arrived on the market. It has transformed the way people work, how they inform themselves, how they shop, how they interact with each other, the list is endless. In Switzerland Internet has grown more and more important and its “technology, in the way it accesses and […]
8.3. The future of new media in Switzerland
Internet and new media have grown very quickly in Switzerland. In this work many examples showed the importance it has taken in the Swiss media landscape. Although its market share is still little compared to other countries like the United States for instance Internet is on pace to become the number one media in the […]
8.2. The future of newspapers in Switzerland
Many people have tried to assess the future of newspapers not only in Switzerland but obviously in the rest of the world as well. A lot of experts around the planet have been very pessimist regarding their survival in the actual economic environment. It must be remained though that was the case as well when […]
8.1.3. Other solutions
In order to continue in the information business and survive all the problems they face newspapers have a few other solutions as well. One of them would be to diversify their activities. The goal is to find other sources of revenue in order to finance the information side and be able to offer quality contents. […]
8.1.2. Eventuality of abandoning the print form for the newspapers
Another solution that is often talked about in Switzerland would be to abandon the print form of newspapers. Obviously the printing and distribution costs are an important part of the total charges of newspapers, as the distribution cost is already 45% of the average cover price(76). If the press would be able to get rid […]
8.1.1. A business model that can work in the new media era
All the changes that occurred due to the Internet have completely shaken the business models of the media industries. The actual period is still a transition phase. The business models have evolved through the years and now it is time to change again. In their article The Dynamics of Media Busniess Models: Innovation, Versioning and […]
8.1. Possible solutions for the newspapers in order to survive in the actual market
As said in the introduction of the chapter the actual period is filled with questions for newspapers. The majority of them are looking into different solutions that could help them have success in the actual market and economic situation. Unfortunately there are few solutions and they are difficult to put in place. Many newspapers have […]
8. The next steps for both businesses
In this chapter the future of newspapers and new media will be discussed. Making predictions is not an easy task because at the present time there are more open questions than answers. After analyzing all the statistics, articles, conferences and the different opinions of professionals of the media, this part of the work is going […]
7.4.3. Verdict
In Switzerland the best way to proceed would be to stick to indirect aids as long as possible. If the sum that is provided by the government for the framework conditions is raised substantially and other propositions that have been made are followed then the Swiss traditional press could survive. It must be remembered that […]
7.4.2. Direct aids
For many observers of the media world these measures will not be enough in the future to prevent the newspapers from sinking. What those people recommend is a direct help from the state. A lot of European countries benefit from direct help from their respective state. An article in the newspaper Le Courrier that was […]
7.4.1. Indirect aids
For the large majority of editors in Switzerland the best solution to adopt would be indirect help from the state. This way, newspapers can keep their independence. This is a key notion for editors across Switzerland because they believe direct help would lead to the contents of their newspapers being influenced by the state. Even […]
7.4. Indirect versus direct aids
There are two options available for the Swiss government if they decide to help newspapers. It is either indirect or direct help. In this section both cases will be discussed and an analysis of what would suit Switzerland best will be conducted afterward. Page suivante : 7.4.1. Indirect aidsRetour au menu : Analyzing the influence […]
7.3. Reasons to help newspapers for the Swiss government
As stated several times in the preceding chapters newspapers are an important element of the democracy. This is the first reason why the Swiss government should help them continue to exist. Historically speaking newspapers have always had a big role in the media landscape and that have been one of the trademarks of Switzerland. Even […]
7.2.5. New information entity
The last suggestion that is going to be presented is the idea to create a new information entity to ensure quality of information. This would be in a case in which the other measures do not permit to save journalism. Bertil Cottier believes it will be the case presents how this new information tool would […]
7.2.4. Measures regarding education towards media
A following domain where the government could help is by putting emphasis on the importance of the media in Switzerland. In order to do that they could first of all help finance the Swiss universities develop journalists. So Switzerland can have great journalism they should have great journalists. And it begins with their education in […]