IPO firm value and its connection with cornerstone and wider signalling effects

摘要: Abstract ‘Cornerstone’ investor agreements, in which high net-worth entities receive a guaranteed block of IPO shares, constitute an important potential signal value. Their recent emergence the Hong Kong market setting, tandem with detailed prospectus disclosures on such items, opens-up new field inquiry information signalling arena. I demonstrate strong link between agreements' various dimensions (i.e., presence, size, number investing parties and lock-up period) initial value, as measured by market-to-book Tobin's Q, at points during first 30 days' trading. Consistent arguments, cornerstone-invested display stronger post-listing earnings growth. Global coordinators' on-market stabilization actions are also inversely related to all four cornerstone (presence, period). The present study examines dual-tranche structure HKEx-organized IPOs finds that proportion shares initially assigned retail (placing) tranche is inversely- (positively-) Q multiples. This result consistent more informed (institutional, corporate individual) investors squeezing-out most attractive issues. Higher valuation multiples evident where placing arm internationally-based issues containing secondary offers.