题目材料
Researchers recently examined the initial public offering (IPO) - a private firm's first sale of stock shares to the public- of firms listed on Kenya's Nairobi Stock Exchange (NSE) between 1994 and 2008. During this time, the number of IPOS listed per year varied to examine the extent to which four different variables-investor sentiment, firm size. board prestige, and firm age- affected the IPO stock share price, which is set by the firm.They hypothesized that all four variavles would show a strong positive correlation with this IPO asking price. However, after examining the firms listed, they were surprised to find that none of the variables showed a strong positive correlation with IPO pricing, and in fact investor sentiment and board prestige both showed a strong negative correlation.
The researchers also discovered that nearly all of these IPOs were underpriced by an average of 50 percent, which is to say the IPO share prices were about half of what the share prices were at the close of that first day of trading. Such underpricing constitutes a loss to the listed firm because teh firm could have immediately raised more money with a higher price. The researchers noted that firms should take care to set an IPO price low enough to capture investor interest but high enough to generate sufficient capital for the firm.