Dimitrios Gounopoulos | University of Sussex (original) (raw)

Papers by Dimitrios Gounopoulos

We examine the role of trademarks in firm longevity and IPO underpricing. We borrow arguments fro... more We examine the role of trademarks in firm longevity and IPO underpricing. We borrow arguments from asymmetric information theory and juxtapose alternative explanations to uncover which approach best describes the underpricing phenomenon with the aid of trademarks relationship to firm longevity. We further argue that TMs that are associated with physical products are more likely to reduce information asymmetries than TMs associated with services. Therefore, we posit that TM activity by firms in the service industries is more likely to increase underpricing while in the case of the manufacturing firm’s TM activity is less (or not) likely to result to increased underpricing. We collect 2,275 US IPOs from 1997-2016 and we find that on average the presence of trademarks in a firm’s portfolio increases underpricing. We link our results with the extant literature and provide evidence which supports that higher trademark activity is associated with firm longevity and signaling quality throu...

Journal of Corporate Finance, 2021

The study examines the effect of earnings management by classification shifting on firm success, ... more The study examines the effect of earnings management by classification shifting on firm success, focusing on the survival of newly listed firms. We argue that shifting income-decreasing expenses from core to special items should negatively associate with future operating performance because of improper signaling of actual repeatable core profitability. We find that classification shifting strongly and negatively affects future Initial Public Offering (IPO) success and survival. We further identify the economic mechanisms that drive this finding and observe that our results are mitigated when the quality of external corporate governance alleviating agency concerns is stronger, also for IPO firms operating within stronger business contexts. Therefore, in an environment that facilitates firm survivability, the existence of weaker than reported sustainable performance may not end up materializing in the form of lower firm survivability as these factors aid firms’ continuing operations from a business perspective. Our findings provide evidence of the longer-term implications of a method of earnings management that has long been considered “soft” and without any longer-term reversing consequences.

This paper uses a unique testing ground on the effect of price limits upon IPOpricing and initial... more This paper uses a unique testing ground on the effect of price limits upon IPOpricing
and initial returns. The Athens Stock Exchange offers the opportunity for this new
experiment, as three substantial changes in limit regulations were implemented in a
short period of eight years. The results indicate significant differences in initial
returns. Effective price limits reduce underpricing in all market segments, without
visible diminution of IPO activity. The introduction of mandatory book‐building
after price limits were phased out in Athens also led to reduced underpricing in the
main market segment. Nevertheless, the existence of an independent effect of price
limits explains why some regulators continue to use them to the present day.

The study explores the growth of the Athens Stock Exchange through new listings and IPOs over the... more The study explores the growth of the Athens Stock Exchange through new listings and IPOs over the period 1880-1940. We examine institutional changes in exchange governance and listing requirements. On a theme that has not been addressed before, we find that simple listings were far more numerous than actual IPOs, while even during ‘hot’ listing periods IPO activity was relatively limited. IPOs in Greece remained unregulated throughout the period and there is only sparse evidence on the involvement of professional investment banking services. IPOs over-pricing in the early decades gives way to under-pricing in the 1920s. The growth of the Greek stock market was coincident with development episodes in the economy, as well as phases of protectionism. It has been driven by a demand for listings basically serving the liquidity needs of company owners. Finally, the study presents data on "quasi-IPOs" (i.e. capital increases shortly after listing) and shows that they offer a more accurate assessment of the demand for the financing of listing firms.

This paper examines empirically the effect of initial public offering (IPO) issuance on seasoned ... more This paper examines empirically the effect of initial public offering (IPO) issuance on seasoned equity offering (SEO) decisions and incentives. The evidence from China indicates that specific IPO characteristics, including corporate governance issues, determine the size and timing of an SEO. The magnitude of the influence of the IPO on a subsequent SEO is sensitive to the amount of time between these events. We find that companies with higher growth perspectives and a high debt ratio are likely to conduct an SEO within the first year following the IPO. Further, our findings suggest that state ownership is associated with strong SEO activity.

We examine the choice and the offer spreads between callable and non-callable bonds. We find sign... more We examine the choice and the offer spreads between callable and non-callable bonds. We find significant differences by industry sector so our results are segmented by financial and non-financial industries. For the financial sector, the popularity of callable and non-callable bonds is significantly related to the economic environment. Financial and high grade non-financial callable bonds are also more likely to be issued via a shelf prospectus. While firms that issue callable bonds do not consistently display the characteristics associated with severe agency problems, the issue choice for below investment grade non-financial and lower rated financial bonds, where we can expect agency problems to be more severe, is more consistent with agency theory than the issue choice for higher rated bonds

We examine whether CEO educational and professional attainments are associated with short-run IPO... more We examine whether CEO educational and professional attainments are associated with short-run IPOs performance. We find that returns are negatively associated with Ivy-League education, the existence of at least one University degree and the total number of qualifications. After controlling for endogeneity and self-selection bias results show that at the graduate level of education the Master of Arts, the MBA, the Juris and Medical Doctor titles present negative relation with the money left on the table. The same is true for any professional qualification. It is also reported that only in the case of the PhD title the Nobel Elite group of Universities outperforms the rest of the sample.

It is a commonly held view that gold protects investors’ wealth in the event of negative economic... more It is a commonly held view that gold protects investors’ wealth in the event of negative economic conditions. In this study, we test whether other metals offer similar or better investment opportunities in
periods of market turmoil. Using a sample of 13 sovereign bonds, we show that other precious metals, palladium in particular, offer investors greater compensation for their bond market losses than gold.
We also find that industrial metals, especially copper, tend to outperform gold and other precious metals as hedging vehicles and safe haven assets against losses in sovereign bonds. However, the outcome of the hedge and safe haven properties is not always consistent across the different bonds. Finally, our analysis
suggests that copper is the best performing metal in the period immediately after negative bond price shocks.

This study examines the forecast accuracy of newly listed companies on the Athens Stock Exchang... more This study examines the forecast accuracy of newly listed companies on the Athens Stock Exchange and it continues by investigating earnings forecast with pricing of IPOs. It uses a unique data set of 208 IPOs, which were floated during the period of January 1994 to December 2001 in the Athens Stock Exchange. The findings derived show poor predictability errors regarding individual IPOs forecasts. In order to test companies’ specific characteristics and variations in accuracy, we conduct a multivariate regression analysis. The results suggest that investors are, able to anticipate forecast errors at the time of listings. Study on independent determinants that influence forecast accuracy show that three variables– age of the IPOs, ownership by insiders and industry classification – are significant determinants.
Pricing of IPOs indicates that firms with negative earnings forecast (pessimistic) are associated with low level of underpricing while optimistic management earning forecast for an IPO can be a signal for high initial returns. Consistent to the results reported in the USA by Ljungqvist and Wilhelm (2003), and Loughran and Ritter (2008), this study highlights that on Greek Stock Exchange IPO underpricing increase in the late 1990s. It claims that such a trend can be estimated by two variables: (i) the optimistic forecast provided by issuers for the IPOs of that period, (ii) the high-growth of the market and the boom of technology firms. The results suggest that accurate forecasts are not rewarded with less money left on the table. Finally, it shows that size of the firm, leverage and economic conditions significantly affect market adjusted initial returns.

Existing empirical work supports the notion that make whole and claw back bonds are explained as... more Existing empirical work supports the notion that make whole and claw back bonds are
explained as methods to resolve the underinvestment problem. We suggest that if
these provisions genuinely resolve the underinvestment problem then make whole and
claw back provision bonds should share in the benefits from the resolution of the
underinvestment problem through more frequent credit upgrades and/or less frequent
credit downgrade when compared to a similar sample of otherwise similar callable
bonds not employing make whole or claw back provisions. We find evidence that
make whole call provisions genuinely alleviates the underinvestment problem but the
claw back provision seems to resolve the underinvestment problem at the expense of
bondholder’s wealth.

Companies going public in Greece include a forecast of next year's profit in their prospectuses. ... more Companies going public in Greece include a forecast of next year's profit in their prospectuses. Investors use this information for their future decision. Accuracy of the forecast is crucial because it seems to be a credible signal for long-term performance of stocks.

Initial Public Offerings: an international perspective

The purpose of this paper is to study the phenomenon of flipping (liquidation of IPO in the first... more The purpose of this paper is to study the phenomenon of flipping (liquidation of IPO in the first two-three days of trading) in the immediate aftermarket. We investigate the trading behaviour of all investors in 51 IPOs that took place from January 2003 -December 2004 with fixed offer price mechanism. We access electronic share settlement records for each company to investigate whether initial subscribers flip their shares during the first two days of trading and relate this flipping behaviour to issuer, shareholder, underwriter and market characteristics. On average flipping accounts for only 37.67% of trading volume and 24.30% of shares offered during the two first days of trading. Institutions do more flipping than retail investors and cold IPO's are flipped much more than hot IPO's. Newly firms listed by reputable underwriters surprisingly present high flipping at 43.5% while less reputable banks and syndicates have 34.1% flipping activity for their IPO's. This paper presents a model of the flippers behaviour in terms of shares allocation. The model shows that institutional investors optimally choose to flip more in larger IPO's. Market classification is a factor, which affects flipping activity as institutional investors prefer to flip more in IPO's of secondary (parallel) market. In this model it does not appear any significant flipping activity by retail investors. (JEL Classification: C12, G14, G24).

European Financial …

We analyse the long-run performance of 254 Greek IPOs that were listed during the period 1994 and... more We analyse the long-run performance of 254 Greek IPOs that were listed during the period 1994 and cumulative abnormal returns (CAR) over 36 months of secondary market performance. The empirical results differ from international evidence and reveal long-term overperformance that continues for a substantial interval after listing. Measuring these returns in calendar time, we find statistical significance with several of the benchmarks employed. We also find that long-term overperformance is a feature of the mass of IPOs conducted during a pronounced IPO wave. Cross-sectional regressions of long-run performance disclose several significant factors. The study demonstrates that although Greek IPOs overperform the market for a longer period, underperformance eventually emerges, in line with much international evidence. Our interpretation is that the persistence of overperformance over a significant interval is due to excessive supply of issues during the 'hot IPO period'. Results associated with pricing during the 'hot IPO period' indicate positive short-(1-year), medium-(2-year) and negative long-term (3-year) performance.

Journal of Financial …, Jan 1, 2007

This study examines the price performance of initial public offerings (IPOs) in the Cyprus Stock ... more This study examines the price performance of initial public offerings (IPOs) in the Cyprus Stock Exchange during the period 1999-2002. It investigates the difference between the IPOs listing price and their equilibrium market price through studying a sample of 75 new listed companies. Specifically, it examines the differences between the listing price of IPOs and their equilibrium market prices at the end of the first day, sixth, twelfth, twenty-fourth and thirty-sixth month. From the derived results it is evident that Cypriot IPOs have extremely large positive initial returns, especially on the end of the first trading day. Long term results, not taking into account the first day returns, are much lower and sometime even negative. Both these trends are in agreement with the outcomes of international empirical studies.

Available at SSRN: http://ssrn. com/abstract, Jan 1, 2004

This study examines the earnings forecast accuracy of newly listed companies on the Athens Stock ... more This study examines the earnings forecast accuracy of newly listed companies on the Athens Stock Exchange and further investigates the relationship between earnings forecast and pricing of IPOs. It uses a unique data set of 208 IPOs, which were floated during the period of January 1994 to December 2001 in the Athens Stock Exchange. The results suggest that investors are able to anticipate forecast errors at the time of listing. Pricing of IPOs indicate that firms with negative earnings forecast (pessimistic) are associated with low level of underpricing while optimistic management earning forecast can be a signal for high initial returns. Three variables -age of the IPOs, ownership by insiders and industry classification significantly contribute towards accuracy of earnings forecast.

Maritime Policy & Management

We analyze the short and long-run price performance of 143Global Shipping IPOs listed during the ... more We analyze the short and long-run price performance of 143Global Shipping IPOs listed during the 1984-2007 period in major Stock Exchanges computing buy and hold abnormal returns (BHAR) and cumulative abnormal returns (CAR). We find average underpricing for shipping IPOs is 17.69%. The light underpricing is positively related to the age of the firm, the reputation of the stock exchange they reach listing and the market condition of the period they go public and negatively related to the reputation of the underwriters. In the long-run, Shipping IPOs underperform after five months holding period. Specifically using the buy-and hold returns as a measurement for long-run performance, we find that investors who buy immediately after listing and hold shares for three years will make a loss of 15.72%. The survey suggests that global shipping industry surprises us regarding the maturity in the behavior of its investors.

Maritime …, Jan 1, 2010

This article empirically analyses the initial and aftermarket returns for US-listed Shipping init... more This article empirically analyses the initial and aftermarket returns for US-listed Shipping initial public offerings (IPOs). Our main objective is to fulfil the great need for the US Shipping evidence on long-run performance of IPOs. We aim to test the extent to which signalling models explain the reasons for the issuance of IPOs using the long-term price performance approach. We concentrate on a sample of 61 IPOs listed during the period 1987-2007 in four major US Stock Exchanges, computing buy-and-hold abnormal returns (BHARs) and cumulative average returns (CARs). The results show that US-listed Shipping IPOs are underpriced on initial trading day on average by only 4.44 per cent, a figure that indicates an outstanding level of maturity for the shipping sector. In the long run, Shipping IPOs listed in the United States offer 1-, 2-and 3-year holding period returns (BHAR) of 7.50, 7.73 and 3.26 per cent, respectively. The conclusion suggested by those results is that investing in the United States is not a guaranteed investment for long-term Shipping IPOs-oriented investors.

papers.ssrn.com

We estimate both initial underpricing and long-run stock performance for 138 Dutch IPOs that were... more We estimate both initial underpricing and long-run stock performance for 138 Dutch IPOs that were listed during the period 1990-2009, making use of widely used BHAR and CAR and of alternative benchmarks (CAPM, FF3F, FF4F, Calendar time) over 36 months of secondary market performance. Findings align with international evidence and reveal long-term underperformance while they differentiate as this underperformance appears only few months after listing. Measuring these returns in calendar time, we find statistical significance with several of the benchmarks employed. Using buy and hold abnormal returns, we confirm the low underpricing level of Dutch IPOs. Cross-sectional regressions of short-and long-run performance disclose several significant factors. An underwriter's reputation and market (hot) condition prove to be significant in both short-and long-term cases. In contrast to many studies, we attribute long-run underperformance to IPOs listed during cold market periods. Results associated with pricing during the "hot IPO period" indicate better long-term (3-year) performance.