Page 140 - Initial Public Offering - An Introduction to IPO on Wall Street
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growth markets where businesses compete aggressively for market share.


               For instance, when a business is the first to IPO successfully in a tough industry, there can avail
               many benefits. The opportunity to gain more market share by exploiting the influx of capital
               and increased exposure created by the IPO is one of these major benefits. Many of the benefits
               of  going  public  hold  greater  value  for  an  organization  looking  to  gain  market  share  in  a
               competitive sector.

               Being the first publicly traded business in a sector can also, of course, have its drawbacks.
               Quarterly and annual financial reports must be disclosed when a business goes public. Although
               this knowledge is useful to investors, rivals may also use it to obtain insights into the plans and
               activities of the business. This knowledge may be used by rivals to strengthen their plans and
               practices, placing themselves in a stronger place.

                The result of the IPO also provides important data to potential investors and rival companies
               about the industry. In his IPO Market Timing paper, Aydogan Alti observed that “if the offer
               prices of IPOs in a particular month surpassed expectations, the amount of IPOs increases
               exponentially in the following months. On the flip side, the IPO market flattens if the offer
                                             18
               prices are lower than expected ”.















































               18  https://faculty.mccombs.utexas.edu/aydogan.alti/Research/ipo.pdf







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