Year of Graduation
Performance Evaluation of IPO in Russian Companies
At the present time initial public offerings (IPO) represent one of the most reliable ways to increase the financial possibilities of companies and act as one of the key issues in the field of finance. Due to the rapid development of the emerging countries and the formation of their stock markets there is the upward trend in the number of firms resorting to this source of funding, which shows the usefulness of research in this area from both the theoretical and practical points of view.The aim of this paper is the performance evaluation of IPO in Russian companies. The main objects of this study are the following:analysis of the previous studies regarding the specific phenomena of IPO, and performance evaluation of its in developed and emerging markets;research of Russian companies IPO from 2005 till 2013 phenomena in the short, medium and long term, using econometric, graphics and event study analyses;performance evaluation (short-term, middle-term and long-term) of IPO and possible recommendations to increase it.In this paper hypotheses that describe specific problems of IPO have been tested, such as underpricing, hot issue markets and long-run underperformance. From this analysis the conclusion about performance evaluation of IPO in Russian companies have been stated.According to the above mentioned goal the sample have been formed, including Russian companies provided the initial public offerings from 2005 till 2013. 88 offerings undertaken by Russian companies in the analyzed period have been included in the final sample.Initial underpricing of Russian IPO takes place for all analyzed offerings in the sample. Moreover, the partial adjustment phenomenon is also characteristic of the initial public offerings conducted by Russian issuers, so price revision index has a positive effect on the initial underpricing. In the short term, companies that provided the IPO, characterized by increased returns, in the long – reduced returns, which fully correspond with the results obtained previously in developed and developing countries. Hot issue markets of IPO was also confirmed for Russian companies, and it can be interpreted by a relation with the business cycle, which was previously observed in an environment of academic research.The possible recommendations for improving efficiency of IPO are the following: a uniform distribution of information among key shareholders IPO (high disclosure requirements and developed legislation on the use of insider information); establishment of a more equitable and efficient offering price by attracting more investment banks; guarantees regarding support prices after the start of trading for a certain period of time.