- P Gompers and J Lerner, “The Venture Capital Revolution” (2001) 15 Journal of Economic Perspectives 145, 152–62.
- BS Black and RJ Gilson, “Venture Capital and the Structure of Capital Markets: Banks versus Stock Markets” (1998) 47 Journal of Financial Economics 243.
- Ibid.
- EB Rock, “Greenhorns, Yankees and Cosmopolitans: Venture Capital, IPOs, Foreign Firms & US Markets” (2001) 2 Theoretical Inquiries in Law 711.
- LA Jeng and PA Wells, “The Determinants of Venture Capital Funding: Evidence from Across Countries” (2000) 6 Journal of Corporate Finance 241.
- It is noteworthy, however, that not all new market segments have pursued a high disclosure listings strategy. For example, the United Kingdom has sought to eliminate exchange-based listings rules and transfer authority to the stock exchange regulator, which establishes minimum rules governing admissions. This regulatory arrangement gives the London Stock Exchange some discretion over which applicants, subject to their satisfying the minimum requirements, are admitted to trading on the Alternative Investment Market (AIM). As can be see in Table 2 (below), the AIM imposes less stringent disclosure requirements on the issuer.
- A foreign listing is for example an Israeli firm, not listed in Israel, going public on the Neuer Markt.
- W Aussenegg, P Pichler and A Stomper, “Stick Prices: IPO Pricing on Nasdaq and the Neuer Markt”, University of Vienna Department of Finance Working Paper, April (2002).
- Commentators have documented how the Neuer Markt contributed to the deepening of the venture capital market in the late 1990s. See, R Becker and T Hellmann, “The Genesis of Venture Capital—Lessons From the German Experience”, Stanford University Graduate School of Business Working Paper (2001).
- L Bottazzi and M Da Rin, “Venture Capital in Europe and the Financing of Innovative Companies” (2002) 17 Economic Policy 231.
- TechMark is not an independent exchange but is a segment of the Official List of the London Stock Exchange.
- Grant Thornton, “European New Markets Guide 2002” Grant Thornton Working paper series (2002).
- At the beginning of 2002, the Borsa de Valores de Lisboa e Porto merged with EuroNext. Furthermore, the Bourse de Luxembourg has an agreement about cross membership and cross access with EuroNext.
- Grant Thornton, supra n 12.
- For example, the top executives of EM.TV & Merchandising face trial on charges that they manipulated the share price, New York Times, 27 September 2002. The boss of Comroad, Bodo Schnable, was also charged with share manipulation as almost all the sales reported in the firm's 2001 annual report were fictitious, Financial Times, 27 September 2002.
- A Brav and P Gompers, “Insider Trading Subsequent to Initial Public Offerings: Evidence from Expirations of Lock-Up Provisions”, Duke University and Harvard University Working Paper (2000).
- NASDAQ Europe suffers even more from low liquidity. Innogenetics (listed on NASDAQ Europe) claimed that its share price suffered from the low liquidity of NASDAQ Europe and applied for a listing on EuroNext Brussels. The announcement of the listing triggered a positive announcement reaction of 19.2% which can be attributed to the higher liquidity provided by that market. An earlier transfer (for liquidity reasons) by Melexis from NASDAQ Europe to EuroNext had a similar price reaction.
- NASDAQ Europe, “NASDAQ CEO Outlines Refocused Business Mission”, 26 June 2003 (www.nasdaqeurope.com/pdf_files/press_releases_press_release_260603-2_gb.pdf).
- Amended Proposal for a Directive of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, COM (2002) 460.
- N Moloney, EC Securities Regulation (Oxford, Oxford University Press, 2000).
- PG Mahoney, “The Exchange as Regulator” (1997) 83 Virginia Law Review 1453, 1457–59.
- JR Macey and M O'Hara, “The Economics of Stock Exchange Listing Fees and Listing Requirements” (2002) Journal of Financial Intermediation 297; T Ellingsen and K Rydqvist, “The Stock Market as Screening Device and the Decision to Go Public”, Stockholm School of Economics Working Paper in Economics and Finance No 174, May (1997).
- JJ Angel, “Consolidation in the Global Equity Market, An Historical Perspective”, Georgetown University Economics Working Paper (1998).
- Macey and O'Hara, supra n 22.
- M Pagano and B Steil, “The Evolution of European Trading Systems” in B Steil (ed), The European Equity Markets, The State of theUnion and an Agenda for the Millennium (London, Royal Institute of International Affairs, 1996); C DiNoia, “Competition and Integration among Stock Exchanges in Europe: Network Effects, Implicit Mergers and Remote Access”, University of Pennsylvania Wharton School, Financial Institutions Working Paper, 98–03 (1998).
- M Pagano, “Changing Microstructure of European Equity Markets”, in G Ferrarini (ed), European Securities Markets: The Investment Services Directive and Beyond (The Hague: Kluwer Law International, 1998), 177, 182–85.
- T Foucault and C Parlour, “Competition for Listings”, CEPR Discussion Paper No 2222 (1999).
- B Biais and A-M Faugeron-Crouzet, “IPO Auctions: English, Dutch, …French, and Internet” (2002) Journal of Financial Intermediation 9.
- A Röell, “Competition Among European Exchanges: Recent Developments”, in Ferrarini, supra n 26, 213, 220–21.
- Macey and O'Hara supra n 22.
- T Santos and J Scheinkman, “Competition Among Exchanges”, University of Chicago Department of Finance Working Paper; Foucault and Parlor supra n 27.
- S Huddart, J Hughes and M Brunnermeier, “Disclosure Requirements and Stock Exchange Listing Choice” (1999) Journal of Accounting and Economics 237.
- AW Boot and AV Thakor, “The Many Faces of Information Disclosure” (2001) 14 Review of Financial Studies 1021.
- D Diamond and R Verrecchia, “Disclosure, Liquidity, and the Cost of Capital” (1991) 66 Journal of Finance 1325.
- C Leuz, “Information-Asymmetry Based Evidence from Germany's New Market”, University of Pennsylvania Wharton School Working Paper (2002).
- Neuer Markt firms must issue a quarterly report within two months after each quarter, disclose annual financial statements within three months after the end of the business year according to IAS or US GAAP. Issuers listed on the Nouveau Marché are required to publish quarterly reports (and semiannual accounts) and an audited annual financial statement, according to IAS or US GAAP, where a reconciliation table is provided. Both markets also require that firms provide investors with information about share transactions by managers, the company, and the directors. Issuers are also asked to disclose management reports, summons for annual general meetings, the announcement of distributions and payment of dividends and the issuing of new shares as well as the exercise of conversion, subscription, and rights. Finally, issuing companies must also honour the Takeover Code.
- M Goergen and L Renneboog, “Why Are the Levels of Control (So) Different in German and UK Companies? Evidence from Initial Public Offerings” (2003) Journal of Law, Economics and Organization 141.
- See LM Benveniste and PA Spindt, “How Investment Bankers Determine the Offer Price and Allocation of New Issues” (1989) 24 Journal of Financial Economics 173. Some researchers have suggested that bookbuilding may have a beneficial effect for issuers. For instance, the discretion that underwriters have to allocate shares may reduce the average amount of underpricing. See A Sherman, “IPOs and Long-Term Relationships: An Advantage of Bookbuilding” (2000) 13 Review of Financial Studies 697. However, some argue that bookbuilding gives rise to a principal-agent problem where underwriters have an incentive to underprice IPOs for their own advantage. See T Loughran and JR Ritter, “Why Don't Issuers Get Upset About Leaving Money on the Table on IPOs?” (2002) 15 Review of Financial Studies 413.
- M Goergen, Corporate Governance and Financial Performance (Aldershot, Edward Elgar, 1998).
- T Loughran, J Ritter and K Rydqvist, “Initial Public Offerings: International Insights” (1994) 2 Pacific-Basin Financial Journal 165.
- R Rajan and H Servaes, “Analyst Following of Initial Public Offerings” (1997) 52 Journal of Finance 507.
- Whilst the bookbuilding mechanism used for pricing and allocating most IPOs in continental Europe, national regulators have, nevertheless, created an array of restrictions on allocations. Even though some countries, like Germany, have few contraints on allocation policies, there are a number of countries, such as France and the United Kingdom, which subject the extant underwriting methods to regulatory constraints on allocation discretion. See A Ljungqvist and W Wilhelm, “IPO Pricing in the Dot-Com Bubble”, New York University Stern School of Business Working Paper (2001).
- F Derrien and KL Womack, “Auctions vs. Book Building and the Control of Underpricing in Hot Markets”, Darthmouth College Working Paper (1999).
- A Ljungqvist, “Under-pricing and Long-Term Performance of German Initial Public Offerings 1970–1993”, Nuffield College, Oxford University Working Paper (1994).
- R Van Frederikslust and G Van der Geest, “Initial Returns and Long-Run Performance of Private Equity-Backed Initial Public Offerings on the Amsterdam Stock Exchange” Rotterdam School of Mangement Working Paper (2001).
- B Rogiers, S Manigart and H Ooghe, “An Empirical Examination of the Underpricing of Initial Public Offerings on the Brussels Stock Exchange”, University of Ghent, Vlerick School of Management Working Paper (1993).
- U Cherubini and M Ratti, “Underpricing of Initial Public Offerings in the Milan Stock Exchange”, Banca Commerciale Italiana, mimeo (1992).
- S Manigart and W Maeseneire, “A First Evaluation of Easdaq and Euro.NM and their Initial Returns”, University of Ghent Working Paper (2000).
- R Arosio, F Bertoni and G Guidici, “The Good, the Bad and the Ugly … Everyone Wants to Join the Nuovo Mercato”, Politecnico di Milano and the University of Bergamo Working Paper (2001).
- Ibid.
- Aussenegg, Pichler and Stomper supra n 8.
- Underpricing is calculated as the difference between the share price at the end of the first day (first week) of trading and the offer price divided by the offer price.
- M Goergen, A Khurshed, JA McCahery and L Renneboog, “The Rise and Fall of the European New Markets: On the Short- and Long-run Performance of High-tech Initial Public Offerings”, in JA McCahery and L Renneboog (eds), Venture Capital Contracting and the Valuation of High-technology Firms (Oxford, Oxford University Press, 2003), 464.
- JR Ritter, “Initial Public Offerings”, in D Logue and J Seward (eds), Handbook of Modern Finance (New York, Research Institute of America, 1997).
- See eg JR Ritter, “The Long-Run Performance of Initial Public Offerings” (1991) 46 Journal of Finance 3.
- T Jenkinson and A Ljungqvist, Going Public: The Theory and Evidence on How Companies Raise Equity Finance (Oxford, Oxford University Press, 2001), 55 (collecting studies).
- WH Mikkelson, MM Partch and K Shah, “Ownership and Operating Performance of Firms that Go Public” (1997) 44 Journal of Financial Economics 281.
- T Loughran and JR Ritter, “The New Issues Puzzle” (1995) 55 Journal of Finance 23.
- Rajan and Servaes, supra n 55; J Lerner, “Venture Capitalists and the Decision to Go Public” (1994) 35 Journal of Financial Economics 293.
- SM Tinic, “Anatomy of Initial Public Offerings of Common Stock” (1988) 43 Journal of Finance 789.
- K Ellis, R Michaely and M O'Hara, “When the Underwriter is the Market Maker: An Examination of Trading in the IPO After-market” (2000) 55 Journal of Finance 1039.
- Although the longer-term returns are also negative, they are not statistically significant from zero. The BHRs are, moreover, substantially negative and even reach _50 per cent over a five-year period. It should be noted that these results include the effect of the bursting high-tech and dot-com bubble of March 2000.
- For each of the Amsterdam, Brussels and Milan markets, one outlier firm was removed. Prolion (NMAX) gave a return of around 800% in its first year of trading (603% in the first two years and 545% in the first three years of listing). The impact of one firm was such that without removing it from the sample the first year-average returns were 33.53%, but its removal brought the returns down to _29.33% (significant). International Brachytherapy (Brussels Euro.NM) had a return of 461% in its first year. Open Gate (Nuovo Mercato) achieved a return of 173% in the first year of listing.
- Jenkinson and Ljungqvist supra n 10.
- M Goergen, A Khurshed, JA McCahery and L Renneboog, supra n 53.
- M Lowry and GW Schwert, “IPO Market Cycles: Bubbles or Sequential Learning” (2002) 57 Journal of Finance 1171.
Journal of Corporate Law Studies
Volume 3, 2003 - Issue 2