| Abstract [eng] |
Initial Public Offering, or IPO for short, is the process by which a company shares starts to trade on an exchange. Successful completion of the IPO not only allows the company to raise the necessary capital, but also allows the existing shareholders of the company to sell shares. They can do this both in the secondary market and during the IPO. However, as several studies have revealed, there is a positive change in the share price during the first trading day, which can reach as much as 35% (Andriansyah & Messinis, 2016). Such a high price change indicates a strong underpricing of IPO shares, and manifests itself in lower returns, stock dilution, or reduced company growth potential (because less capital is attracted). Research object - stock returns of the companies that carried out the IPO and the amount of funds raised. The aim of the study is to investigate how the IPO affects the company's financial results. In this study, the financial performance of IPO companies was measured by the amount of funds raised and the stock returns. By empirically analyzing all IPOs that were conducted in the US during 2015-2016, the impact of secondary shares on stock returns and the amount of funds raised was assessed. This study revealed that sale of secondary shares does not in itself have a significant impact on either stock returns, or funds raised. This study found that only the sale of management shares has a significant impact, and only for the first day, one and two years' buy-and-hold stock returns. According to the obtained data, the sale of the management shares positively impacts first day returns, and negatively impacts one and two year buy-and-hold stock returns. Based on the results obtained, it can be stated that the sale of management shares during the IPO increase underpricing and decrease long-run returns. Such results support the agency theory, according to which declining management incentives are associated with poorer long-term performance of the company, and partially support the signal theory, according to which the sale of shareholder shares during IPO sends a negative signal. Based on the results obtained, it is recommended for the management that seeks to sell their shares, do that prior to the IPO (e.g. sell to other shareholders). After analyzing the impact of other factors, this study found that only VC backing status, the size of the company and the investment bank reputation had a significant impact on the stock returns and / or the amount of funds raised. |
