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Managerial Approach of International Initial Public Offerings Valuation

Author

Listed:
  • Cristian PAUN

    (The Bucharest Academy of Economic Studies, Romania)

  • Stefan UNGUREANU

    (The Bucharest Academy of Economic Studies, Romania)

Abstract

Initial public offerings (IPO) of financial instruments on international financial markets represent one of the most important financing channels not only for developed countries, but for emerging ones too. The most sensitive element of international IPOs that could determine the success or failure of them is the initial price mentioned in the prospectus. This initial price used to sell securities to individual or institutional investors is always compared with real market price and is essential for investment decision. For this reason, in almost cases of international IPOs, the underpricing effect is present. This paper discusses the problem of underpricing effect and highlights the most sensitive problems with securities’ valuation methods that are commonly used by financial managers to decide and to act in this case.

Suggested Citation

  • Cristian PAUN & Stefan UNGUREANU, 2010. "Managerial Approach of International Initial Public Offerings Valuation," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 11(5), pages 905-915, December.
    • Handle: RePEc:rom:rmcimn:v:11:y:2010:i:5:p:905-915
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    File URL: https://www.rmci.ase.ro/no11vol5/12.pdf
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    References listed on IDEAS

    as
    1. Carter, Richard B & Manaster, Steven, 1990. "Initial Public Offerings and Underwriter Reputation," Journal of Finance, American Finance Association, vol. 45(4), pages 1045-1067, September.
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    More about this item

    Keywords

    Initial Public Offering; underpricing effect; stock valuation; rating; discounting; discount rate.;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications

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