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The Importance of Initial Public Offering for Capital Market Development in Developing Countries

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  • Pešterac Aleksandra

    (University of Kragujevac, Faculty of Economics, Republic ofSerbia)

Abstract

The first issue of shares is the key moment in the life cycle of any company that was not previously listed on a stock exchange. Considering the fact that transformation into a public open joint stock company brings along a number of advantages and challenges, it would be of great importance to possess knowledge about initial public offering (IPO) issuing activity, as well as stay updated with the number and value of globally realised IPOs. The aim of the paper is to use the comprehensive analysis of IPOs realisation process in order to point out the importance of going public, having in mind both the corporations and investors in the capital market, as well as the economy as a whole. In accordance with the set goal, the paper will present the effects of the realised IPO processes in the countries of Western Europe, China, Japan and the USA. When it comes to developing countries, the IPO of shares on a stock exchange is of special importance, since it contributes to the further development of capital market. Due to the particularity of the Serbian macroeconomic environment, the trends of privatisation process, the insufficient protection of investors, the high level of information asymmetry and the lack of corporate education, there have been no IPO processes realised on the Belgrade Stock Exchange over the past eight decades.

Suggested Citation

  • Pešterac Aleksandra, 2020. "The Importance of Initial Public Offering for Capital Market Development in Developing Countries," Economic Themes, Sciendo, vol. 58(1), pages 97-115, March.
    • Handle: RePEc:vrs:ecothe:v:58:y:2020:i:1:p:97-115:n:6
    DOI: 10.2478/ethemes-2020-0006
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    More about this item

    Keywords

    initial public offering (IPO); going public; capital market; underpricing; information asymmetry; stock exchange;
    All these keywords.

    JEL classification:

    • F39 - International Economics - - International Finance - - - Other
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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