Efficiency dynamics of Initial Public Offerings Using Data Envelopment Analysis and Malmquist Productivity Index Approach

Why Do IPO Firms Have Takeover Defenses?

The research problem We examined whether the reputation of the nominated advisor (Nomad) impacts the accrual and real earnings management of initial public offering (IPO) firms on the Alternative Investment Market (AIM) of the London Stock Exchange in the UK. Motivation and theoretical reasoning While the role of Nomads on the AIM is a significant determinant in ensuring the integrity of the financial reporting quality of their advisee firms, to date, there has been no analysis of the impact of Nomads on such reporting activities. The test hypothesis The main hypothesis of this study tested whether IPO firms that appoint a more reputable Nomad exhibit a lower level of accrual-based and real-based earnings management during the IPO. Target population The initial sample of this study consisted of all IPO firms that went public on the AIM between January 1998 and December 2008. After restricting the sample to non-financial IPO firms with the necessary data available to estimate accrual and real earnings management and Nomad reputation, the final sample consisted of 432 IPO firms that are backed by 80 Nomads over the sample period. Adopted methodology Two real earnings management activities were examined: sales-based manipulation and discretionary expenses–based manipulation. Discretionary accruals were estimated as a proxy of accrual earnings management. To construct the unweighted index of Nomad reputation (NOMAD), data were manually collected for the number of IPOs backed by a Nomad, proceeds of IPOs backed by the Nomad, the Nomad’s age, and the Nomad’s credit score. Analyses Following prior research, several techniques and regressions were employed to test the hypothetical relation between Nomad reputation and accrual and real earnings management. As for robustness, both Heckman and instrumental variable (IV) regressions were used to control for sample selection bias, and a three-stage least squares (3SLS) estimation approach was used to test for the two-way interaction between Nomad reputation and earnings management. Findings This paper found evidence that more reputable Nomads on the AIM play a significant role in constraining the use of accrual-based and real-based earnings management during the IPO year by their advisee IPO firms. This is also the first evidence on the significant role of reputable financial institutions and intermediaries in monitoring the financial reporting quality in less regulated markets such as the AIM in the UK.

Since the introduction of the continuous disclosure regime in the Corporations Law in 1994, managers of firms undergoing an initial public offering (IPO) have a specific duty to correct earnings forecasts in their prospectuses, on a timely and comprehensive basis, if they are materially inaccurate. This study examines the extent to which Australian IPOs, with explicit quantitative earnings forecasts in their prospectuses, sufficiently fulfill this duty in accordance with the continuous disclosure requirements. In a sample of 110 IPOs listed on the ASX between the years 1994 to 1997, univariate t-tests and a multivariate model are utilised to test for those factors that influence the disclosure decision of IPO managers. The results of these tests reveal that IPO firms, whilst having a tendency to be over-optimistic in forecasting their earnings potential, do not frequently (24%) release ASX disclosures to correct these inaccuracies. Further, IPO firms have a preference for warning investors of a non-fulfillment of a prospectus forecast rather than an over-achievement. Firms with larger prospectus forecast inaccuracies are less likely to correct or confirm a forecast than those with smaller inaccuracies. However, it remains that confirmations are released where actual earnings are materially different from that forecasted in the prospectus. It is also found that IPO firms' disclosure behaviour can be predicted on a firm-specific basis. Membership in a highly regulated industry and the provision of a greater number of prior earnings figures in the prospectus, are factors that contribute to the likelihood that an IPO will correct a prospectus forecast. Firm size, however, is not found to be a significant influence. Accordingly, these findings suggest that IPO discretionary disclosure behaviour is selective, based on the content of the news, size of the revision and specific characteristics of the firm, rather than comprehensive as required under the continuous disclosure provisions.

Pre-offering earnings and the long-run performance of IPOs

PurposeThis study aims to examine the short- and long-lived effects of the International Financial Reporting Standards (IFRS) mandate on the quality of reporting information of initial public offering (IPO) firms in emerging market economies.Design/methodology/approachThe study used several difference-in-differences models for a sample comprising 102 Saudi Arabian IPO firms for 2003–2017.FindingsIt found that mandating the application of the IFRS had a significant short-lived but no long-lived effect on IPO firms’ information asymmetry. When information asymmetry was high such as in the primary market, the IFRS succeeded in alleviating the underpricing of IPO firms. Conversely, in the secondary market, with negligible information asymmetry, the IFRS was not beneficial for the long-term performance of companies in the IPO market.Originality/valueThis study is the first of its kind in the emerging market context and has important implications for IPO investors and analysts, IFRS-IPO researchers and policymakers in emerging economies. The results empirically confirmed that the IFRS mandate had solely a short-lived effect and no long-lasting impact, on the problem of asymmetric information in the IPO market. The effectiveness of the IFRS in producing quality financial reporting is contingent upon large-scale information asymmetry and vanishes when investors and analysts have abundant information about listed firms, even for emerging economies such as Saudi Arabia.

Earnings Quality of Malaysian IPO firms: The Effect of Share Moratorium Provision and Institutional Ownership

The present study examined the economic efficiency of rubber smallholders in Peninsular Malaysia in a disaggregated form using Banker Charnes and Cooper (BCC) and Charnes Cooper and Rhodes (CCR) models of data envelopment analysis (DEA) as well as their respective bootstrap techniques. Multistage data collection was employed on 327 smallholders among 5 districts of Negeri Sembilan state. However, only 307 observations were used in computing inferential statistics, because the young-age category has been removed. The districts include Seremban, Tampin, Rembau, Kuala Pilah and Jempol. The results revealed that, the mean technical efficiency (TE) under variable returns to scale (VRS) and constant returns to scale (CRS) were 0.95, 0.97 0.96 and 0.45, 0.61, 0.33 for the all-age, matured-age and old-age crops respectively. The findings of the result also disclosed that naïve DEA has higher mean scores than bootstrapped-DEA, thus indicating the presence of bias in the former and absence of bias in the later. Also, the efficiency determinants under VRS and CRS as well as their respective bias-corrected (BC) efficiency scores were also analyzed using Tobit regression analysis against the 15 socio-demographic factors. It was found out that critical factors, common to all the age-categories, include educational level, tapping system and marital status under VRS and BC-VRS assumptions, while under CRS and BC-CRS assumptions include race, tapping system, marital status and farm’s distance. Therefore, education of smallholders should be given more attention to increase efficiency. The study finally recommends that the traditional concept of computing efficiency or productivity of rubber and other perennial crops in an aggregated form should be complemented with the disaggregated form as this eliminates any bias and gives meaningful results. Improved methods such as bootstrapping should also be used as this only gives what is called bias-corrected efficiency scores. Regarding the determinants, factors such as education, tapping system and farm distance should be given more emphasis.

This study has a twofold. First, it aimed to measure the efficiency of the insurance sector in the Kingdom of Saudi Arabia during the period 1995-2022. Efficiency was measured using the Data Envelopment Analysis (DEA) method, employing three inputs: general and administrative expenses, underwriting costs, and direct written premiums, and one output represented by the insurance operations surplus. The study also relied on the Malmquist Index to calculate and determine the nature of changes in the total factor productivity (TFP) of insurance companies. The results showed that only one company, Inaya Saudi Arabia Cooperative Insurance, achieved the optimal level of efficiency. Furthermore, the Malmquist Index results indicated a slight decrease in overall productivity, accompanied by a decline in pure technical efficiency and a reduction in scale efficiency. The Second objective of the research was the study of the impact of insurance sector efficiency on economic growth using the Autoregressive Distributed Lag (ARDL) model. Three models were estimated, considering three indicators of efficiency: insurance sector efficiency under constant returns to scale (CRS), under variable returns to scale (VRS), and the Malmquist Productivity Index. The findings revealed a long-run relationship between the efficiency of the insurance sector and economic growth. In the short run, the Error Correction Model (ECM) showed that efficiency has a negative and significant effect in both the CRS and VRS models, while its effect was positive and significant in the productivity index model. The causal relationships between insurance sector efficiency and economic growth were apprehended using the Toda-Yamamoto method. The results indicated a bidirectional causal relationship between insurance sector efficiency and economic growth in the constant returns to scale (CRS) model. In contrast, the variable returns to scale (VRS) model showed no causal relationship. The Malmquist Index model demonstrated the broadest connection with economic variables and the largest number of causal relationships directed toward economic growth among the models. Our results would have several prominent implications for policymakers when designing strategies to improve the performance and efficiency of the insurance sector, consistent with the economic diversification strategy outlined by the Kingdom in its Vision 2030.

The relationship between venture capital backing and the top management team quality of firms going public and implications for initial public offerings

The growth process of IPO firms

Rice farming plays a critical role in ensuring food security and economic stability in Bangladesh, with environmental conditions significantly affecting its productivity and efficiency. This study assesses the impact of climatic, soil and ecological factors on the performance of three major rice varieties Aus, Aman and Boro using secondary data from 1980 to 2021. Data Envelopment Analysis (DEA) was employed to estimate technical efficiency and Total Factor Productivity (TFP) growth while Tobit regression models were used to quantify the influence of environmental variables including average temperature, rainfall, humidity, sunshine and wind speed, under both Constant Returns to Scale (CRS) and Variable Returns to Scale (VRS) assumptions. The results revealed that average temperature showed a significant positive effect on all rice types under both CRS (β = 0.3356, p < 0.001) and VRS (β = 0.0813–0.1949, p < 0.05) models. Rainfall slightly improved Aman efficiency under CRS (β = 0.0001, p < 0.05) and had mixed effects under VRS positive for Aus (β = 0.0013, p < 0.10) but negative for Aman (β = –0.0027, p < 0.05). Humidity decreased Aus and Aman efficiency under CRS (β = –0.1001 and –0.0531, p < 0.01) but enhanced Boro under VRS (β = 0.0224, p < 0.05). Sunshine reduced efficiency for Boro (β = –0.1699, p < 0.001) and Aman (β = –0.1953, p < 0.001), while wind speed had negative effects on Aus and Aman under CRS (β = –0.1563 and –0.1971, p < 0.05) and a positive impact on Aus under VRS (β = 0.3719, p < 0.05). These findings underscore the differential sensitivity of rice varieties to environmental fluctuations and provide valuable insights for climate-resilient rice production and sustainable agricultural policymaking in Bangladesh. IJSS, Vol. 26(1), March, 2026, pp 39-51

An analysis of energy consumption and carbon dioxide emissions in countries of the Middle East and North Africa

The Post-Issue Performance of Initial Public Offering Firms in the People’s Republic of China

This paper appraises the existing approaches used to measure the underpricing of Initial Public Offerings (IPOs). The conceptual problems surrounding the measurement of IPO underpricing are noted to be significant and suggest that underpricing costs and returns may need to be evaluated with reference to the particular characteristics of individual offerings. For example, details of the number of primary shares on offer, the effect on corporate control of listing, the information effects resulting from listing, the liquidity of shares pre-offer, the impact of speculative activity on post-listing firm value and, finally, the actual dating of an IPO may all need to be considered. In short, the existing measures suggested for IPO underpricing do not allow managers/owners in IPO firms or investors in IPO stocks to assess, unequivocally, the respective costs and returns from underpricing in such issues.

This chapter examines the interactions of initial public offerings (IPOs) and mergers and acquisitions (M&As), in contrast with the common approach of studying them in isolation. Of the many motivations to conduct an IPO (e.g., fundraising, access to capital, increased liquidity, publicity), several of them clearly relate to takeover activities. This chapter analyzes three key forms of interaction: (1) IPO and M&A markets interact when entrepreneurs and early investors from private firms decide to liquidate and cash out their investments. They can exit through an IPO, or they might seek an acquisition by another firm (e.g., sellout to a strategic acquirer, private equity fund, or another financial investor); (2) after a being listed, some firms become takeover targets, and some IPO firms also participate actively in the M&A market as acquirers; (3) between the IPO and M&A markets, one can be used to exert pressure on the other.