Views
5 years ago

* I would like to thank Frank Dobbin, Christopher Marquis, Peter ...

* I would like to thank Frank Dobbin, Christopher Marquis, Peter ...

formation mechanism

formation mechanism whereby the actions of observed others influence goal directed actors (Hedstrom and Swedberg 1998). The social good mechanism presupposes uncertainty about the underlying quality of the product, a shared assumption of both information asymmetry and status signal theories. During the bookbuilding and first-stage pricing process, underwriting practices and norms work to set a low price range. Setting a low price range leads to increased pricing above the range, resulting in higher demand on the first trading day. By influencing pricing above the range outcomes, issuers can impact first-day returns. I hypothesize that institutional pluralism in the investment field will result in differing levels of resistance to normative and mimetic pressures for an IPO discount, predicting variation in pricing above the range, and hence first-day returns, over the past ten years. Institutional Pluralism within the Private Investment Field Institutional private investment firms invest in private companies that have yet to list their shares on public equity markets and are often involved in the subsequent IPOs of these companies. Two large groups of institutional investors actively invest in such private opportunities: venture capital and private equity firms. Both groups of investors are legally organized as “general partners” managing a fund structured as a legal partnership and capitalized by outside investors, or “limited partners” (for a description of the venture capital industry, see Podolny 2001; generally, the same legal structure and investor dynamics apply to the private equity industry). As distinct from other professional institutional investors, venture capital and private equity firms primarily invest in private opportunities not available to the general public trading equity shares listed on public exchanges. Hence, venture capital firms invest in early- stage companies not listed on any exchange and private equity firms invest in companies at all 16

stages of development, including public companies. However, private equity firms often negotiate private transactions with such public companies that are not available to other public market investors, such as Private Investments in Public Equities (PIPEs) or Leveraged Buy-Outs (LBOs). Such negotiated investments usually entail some combination of management control, board representation, preference shares, assumption of debt obligations by the public company, or even the complete delisting of the company’s shares (transforming the public corporation back into a private company). Unlike venture capital firms, private equity firms often assume control of the companies they invest in and usually manage far larger pools of capital given their focus on later-stage or even public company investments. However, both venture capital and private equity firms are often involved in IPOs of their companies given their investments in private companies, and for private equity firms the large LBO investments that delist the shares of public corporations. As evidenced by the longstanding self-designated distinction between “LBO” and “growth capital” firms, two logics have coexisted within the private equity industry. The chairman of a leading growth capital private equity firm described, “the buy-out firms are single-mindedly focused on cashflows and leveraging the balance sheet to generate returns . . . they view companies as a stream of cashflows to support debt whereas the growth firms focus on the company’s management and people, and work with them to figure out a long-term strategy for revenue growth . . . we make our money from business growth and hence equity growth, not from leverage.” I term these two coexisting logics “Income” and “Growth.” Income investors view companies as streams of income and cash (perception) that can be used to borrow money that is paid out to shareholders but remains the obligation of the company to repay (belief), and accordingly focus on negotiating financial instruments without regard to other aspects of the 17

We would like to thank the owner, Frank LoPreste. and skipper ...
First and foremost, I would like to thank Peter Jordens, Christine ...
Letters: Psych Ed Rev.doc I would like to thank Peter Sutherland for ...
Dear Parents/Carers, I would like to begin by thanking our superb ...
Thank you Peter [Roberts] I would like to ... - Rio Tinto Iron Ore
Christoph Sauer, Frank T. Peters, Roland F. Staack, Giselher Fritschi ...
I would like to thank, in particular, the Bank of ... - RFJ Legislation
To the editor: I would like to thank Dr. Bray for ... - Protein Power
I would like to take this time to sincerely thank - City of Hutchinson ...
MY PERCEPTION OF LEADERSHIP I would like to thank ... - Thermax
(1)Ladies and gentlemen: First, I would like to thank Mr. Theo ...
Group Volunteering at IndyHumane I would like to thank you for your ...
I would like to thank the American Alpine Club for the support it has ...
Mr. sectary, I would like to thank you - US Department of Agriculture
First of all, I would like to thank - The Raw Food Coach
Speech of Germany I would like to thank ( ) for giving me their ...
I would like to thank the post for - Atlantic County Clerk's Office
Robert, thank you for inviting me. I also would like to welcome Dr ...
Hello Everyone! Dear Friends! First I would like to say thank you. I ...
07/30/2012 Test of the TIM Call Tree I would like to thank everyone ...
Montreal 2011 First off I would just like to say thank you to the ACS ...
Hi Jo-Anne Mark and I would like to thank you and all the staff at the ...