MANAGEMENT OWNERSHIP’S EFFECT ON UNDERPRICING AND THE POST-ISSUE OPERATING PERFORMANCE: THE CASE OF ISTANBUL STOCK EXCHANGE
Abstract
Ownership structure plays a very important role in corporate finance for
emerging markets (LaPorta et al., 1999), perhaps more so than in developed
countries (Kim et al., 2004). The degree of information asymmetry among
participants in relatively high in emerging market countries due to the relatively
undeveloped market structure of these markets. This stuation might allow
influential managers-owners greater latitude to engage in and act upon their
desires.
Going public typically leads to significant changes in the ownership of a
company’s stock. Thus, an initial public offering of common stock results in
seperation of managerial control and ownership. Jensen and Meckling (1976)
point out that the interest of managers and shareholders diverge as managers’
stakes decrease and ownership is dispersed. Their argument implies that a
company’s performance suffers after going public. Management retention after
the initial public offering (IPO) significantly affects the post-issue operating
performance. According to both the agency theory hypothesis (Jensen and
Meckling, 1976) and the signaling hypothesis (Leland and Pyle, 1977) we can
expect relatively superior operating performance from firms with higher
ownership retained by entrepreneurs in comparison to the firms with lower
ownership retained. For instance, Jain and Kini (1994)’s results of relatively
superior post-issue operating performance of firms with high-ownership
retention after the initial public offering by entrepreneurs are consistent with
the implications of agency and signaling models.
This study analyses the effect of management ownership level on both the
initial-day return (underpricing) and the post-issue operating performance of
205 initial public offerings listed on the İstanbul Stock Exchange during 1992 to
2000. In so doing, we compare both underpricing and the post-issue operating
performance of high-ownership and low-ownership initial public offering firms.
We split the sample into two groups based median alpha. Alpha is the fraction
of the firm retained by the pre-issue shareholders after the IPO. The above
median alpha subsample is referred to as the high-ownership group and the
below median alpha subsample is referred to as the low-ownership group.
To measure the operating performance of the high-ownership and lowownership
initial public offering firms, six different performans measures are
employed. The first measure is the operating return on assets, which is
operating income before interests and taxes divided by total assets. The second
measure of operating performance is also operating return on assets, which is
operating income divided by total assets. The third measure is the operating
profit margin, which is operating income deflated by net sales. Another ratio we
employed is equity capital turnover, which is net sales deflated by stakeholders’
equity. Asset turnover is used as the fifth operating performance measure. The
last operating performance measure is a ratio which divides operating cash
flows by total assets.
Underpricing is taken as the raw initial return from the offering price to the
market price at the end of the first trading day.
Besides, a cross-sectional regression model is used to examine the effect of
ownership concentration on the post-issue operating performance. Cash flows
are used as dependent variable while management ownership level is used as
independent variable in the regression analysis. Investment bank and auditing
firm reputation, offer size, and pre-IPO capital expenditures are also used as
independent variables in the regression model.
In our analysis, a significant relation is found not only for the relation
between underpricing and equity retention by the original owners but also
between post-issue operating performance and equity retention by the original
owners after the IPO at the İstanbul Stock Exchange. High-ownership IPO
group exhibits relatively less underpricing compared to low-ownership IPO
group. Additionaly, a relatively superior post-issue operating performance
occurs for the high-ownership group in comparison to low-ownership group.
YÖNETİCİ-SAHİPLİK DÜZEYİNİN HALKA ARZ SONRASI FAALİYET PERFORMANSI VE DÜŞÜK FİYATLANDIRMA ÜZERİNE ETKİSİ: İMKB ÖRNEĞİ
Abstract
Gelişen piyasalarda işletmenin sahiplik yapısı kurumsal finansmanda önemli rol oynar(La Porta ve diğerleri, 1999). Öyle ki bu rol gelişmiş ülkelere göre daha önemli olabilir. Gelişmekte olan piyasalarda, piyasa özelliklerinin bir sonucu olarak piyasa iştirakçileri arasında daha yüksek dereceli bilgi asimetrisi vardır(Kim ve diğerleri, 2004). Halka arzla birlikte işletmelerin sahiplik yapılarında oluşan önemli değişiklikler yönetici-sahiplerin işletmeye karşı taşıdıkları teşvikleri etkiler. İşletme performansı bu durumdan olumsuz yönde etkilenebilir.Temsil hipotezi(Jensen ve Meckling, 1976) ve işaret hipotezi(Leland ve Pyle, 1977), yüksek mülkiyete sahip firmaların düşük mülkiyete sahip firmalara göre daha yüksek performans göstermelerinin beklendiğini ileri sürmektedirler.Çalışmada, yönetici-sahiplik düzeyinin halka arzlarda hem kısa dönemli hisse senedi fiyat performansına (düşük fiyatlandırma) hem de halka arz sonrası uzun dönemli faaliyet performansına olan etkisi İstanbul Menkul Kıymetler Borsası için incelenmiştir. Bu amaçla, yüksek yönetici-sahiplik taşıyan firmalar ile düşük yönetici-sahiplik taşıyan firmaların ilk gün getirileri ve halka arz sonrası faaliyet performansları karşılaştırılmıştır. Araştırma, 1992-2000 yılları arasında ilk kez halka arz olmuş 205 firma üzerinden gerçekleştirilmiştir. Yapılan analizde sadece düşük fiyatlandırma ve halka arz sonrası yönetici-sahiplik düzeyi arasında değil, arz sonrası faaliyet performansı ile yönetici-sahiplik düzeyi arasında da anlamlı bir ilişki elde edilmiştir. Çalışmadaki sonuçlara göre, yüksek yönetici-sahiplik düzeyi taşıyan grup düşük yönetici-sahiplik düzeyi taşıyan gruba göre daha az düşük fiyatlandırma göstermiştir. Benzer bir ilişki arz sonrası faaliyet performansı için de söz konusudur. Yüksek-yönetici-sahiplik düzeyi taşıyan grup, düşük yönetici-sahiplik düzeyi taşıyan gruba göre halka arz sonrası dönemde daha iyi faaliyet performansı göstermiştir.
Details
| Other ID | JA93AZ53DE |
|---|---|
| Journal Section | Articles |
| Authors | |
| Publication Date | June 1, 2009 |
| Published in Issue | Year 2009 Volume: 11 Issue: 1 |