IPO valuation: the international evidence

Abstract

This chapter studies the valuation of 6,199 IPOs during 1998–2015 for Australia, Canada, China, Germany, India, Japan, United Kingdom, and United States. Net income is positively related to initial public offering (IPO) valuation in each of the eight countries. The economic impact of net income is largest for Chinese IPOs and smallest for Australian IPOs. Book value is positively and significantly related to IPO valuation in Canada, Germany, India, and the United States. Capital expenditure is significantly and positively related to IPO valuation in Canada, Germany, India, the United Kingdom, and the United States. There is a positive and statistically significant relation between insider retention and IPO valuation in China, Germany, the United Kingdom, and the United States; positive but marginally significant relationship for India and Japan. Underwriter reputation has a positive and statistically significant relationship for IPOs in China, Germany, India, the United Kingdom, and the United States.