Dissertation/Thesis Abstract

Three Papers on the Sociology of Initial Public Offerings (IPOs)
by Liu, HuiGuo, Ph.D., Indiana University, 2017, 114; 10688197
Abstract (Summary)

This dissertation includes three papers that apply sociological theories to examine a series of phenomena in cross-border IPOs, such as IPO valuation, the utility of endorsing signals, home country effect, and categorization of new ventures by security analysts.

The 1st paper illustrates an inverted U-shaped relationship between the density of U.S. listed Chinese companies and IPO performances of the following IPOs from China. It also documents the benefits that IPO companies gain from the desirability of their home country economy. Moving forward the traditional population ecology literature, the majority of which concerns mortality, birth, and market entry rates, this paper links population density directly to IPO performances, a proxy of legitimacy in the context of the IPO. This paper also documents the top-down spillover effect from home country desirability to individual companies seeking capital overseas. In summary, by testing two different mechanisms that both promote IPO legitimacy, this paper draws attention to the IPO’s environmental effects on IPO performances.

The 2nd paper explores the category emergence of a growing population. As expected, a new category emerges as the population size grows larger. However, it also shows the persistence of existing categorization schemes. Specifically, when possible, security analysts categorize newly public companies according to both its country of origin and its operating industry. Further, it illustrates that companies from modestly-sized sub-populations tend to group into the purest cross-classified subcategories, i.e., subcategories that have the highest percentage of members from both the same countries and the same industries.

The 3rd paper, challenges conventional wisdom regarding the typicality effect, and shows that despite a positive typicality effect on IPO performances consistent with conventional wisdom, the value of endorsing signals helps atypical companies more than typical companies. I argue that this is because newly public foreign companies from atypical industries tend to face more scrutiny due to a lack of comparable precedents for investors to make reference to, which awards their endorsing signals. This paper adds to the relatively thin literature on IPO environment by showing the moderating effect of the IPO environment on IPO performances.

Indexing (document details)
Advisor: Rojas, Fabio
Commitee: Alderson, Arthur, An, Weihua, Michelson, Ethan, Terjesen, Siri
School: Indiana University
Department: Sociology
School Location: United States -- Indiana
Source: DAI-A 79/05(E), Dissertation Abstracts International
Subjects: Finance, Sociology
Keywords: IPOs, Initial public offerings, Sociology, Three papers
Publication Number: 10688197
ISBN: 978-0-355-58967-2
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