Debt vs.
Equity
Financial Markets and Corporate Strategy, David Hillier
Types of Equity Securities
Financial Markets and Corporate Strategy, David Hillier
Ordinary Shares
Financial Markets and Corporate Strategy, David Hillier
Multiple Class Shares - % Firms with
unitary share structures
Financial Markets and Corporate Strategy, David Hillier
Different Types of Multiple Class Equities
Non-Voting Multiple Voting Ownershi Priority Golden Depositar
Preference Voting Right p Shares Shares y
Shares Rights Ceilings Ceilings Receipts
UK 20% 1% 3% 5% 4% 3% -
France 2% 64% 19% 2% 5% - -
Germany 24% - 3% - - - -
Switzerla - 12% 35% - - - -
nd
Spain - - 41% - - - -
Italy 36% - 8% 28% - - -
Netherlan - 67% - - 29% 10% 24%
ds
Sweden - 75% 6% - - - -
Other 8% 8% 11% 8% - 3% -
Financial Markets and Corporate Strategy, David Hillier
Preference Shares
Financial Markets and Corporate Strategy, David Hillier
Exotic Preference Shares
Financial Markets and Corporate Strategy, David Hillier
Warrants
Financial Markets and Corporate Strategy, David Hillier
Volume of Global Equity Offerings 2010
($ millions)
Financial Markets and Corporate Strategy, David Hillier
Depositary Receipts
Financial Markets and Corporate Strategy, David Hillier
Secondary Markets for Equity
Financial Markets and Corporate Strategy, David Hillier
Stock Exchange Systems
Financial Markets and Corporate Strategy, David Hillier
Dealer Markets
Financial Markets and Corporate Strategy, David Hillier
Order Driven System
Financial Markets and Corporate Strategy, David Hillier
Market Efficiency
Financial Markets and Corporate Strategy, David Hillier
Limits to Arbitrage
Financial Markets and Corporate Strategy, David Hillier
Noise Traders
Financial Markets and Corporate Strategy, David Hillier
Sentiment Based Risk
Financial Markets and Corporate Strategy, David Hillier
Bubbles and Crashes
Financial Markets and Corporate Strategy, David Hillier
Bubbles in History
Financial Markets and Corporate Strategy, David Hillier
German Stock Exchange Volatility
Financial Markets and Corporate Strategy, David Hillier
Result 3.1
The stock market plays an important role in allocating capital.
Sectors of the economy that experience favourable share price
returns can more easily raise new capital for investment. Given
this, the stock market is likely to more efficiently allocate capital
if market prices accurately reflect the investment opportunities
within an industry.
Financial Markets and Corporate Strategy, David Hillier
The Public Issue
Financial Markets and Corporate Strategy, David Hillier
Alternative Issue Methods
Public
Issues
Financial Markets and Corporate Strategy, David Hillier
Public Issues
Financial Markets and Corporate Strategy, David Hillier
The Cash Offer
Financial Markets and Corporate Strategy, David Hillier
Other Factors in Equity Financing
Financial Markets and Corporate Strategy, David Hillier
IPO Underpricing
Financial Markets and Corporate Strategy, David Hillier
Underpricing and Firm Size
Financial Markets and Corporate Strategy, David Hillier
IPO Underpricing around the World
Financial Markets and Corporate Strategy, David Hillier
Number of Offerings and Average Issue
Date Return
Financial Markets and Corporate Strategy, David Hillier
The Announcement of New
Equity and the Value of the Firm
Financial Markets and Corporate Strategy, David Hillier
The Cost of New Issues
Financial Markets and Corporate Strategy, David Hillier
The Cost of New Issues
Financial Markets and Corporate Strategy, David Hillier
International Comparison of IPO
Underwriting Fees
Financial Markets and Corporate Strategy, David Hillier
Result 3.2
IPOs are observed frequently in some years and not in others. The
available evidence suggests that the hot issue periods are
characterized by a large supply of available capital. Given this
interpretation, firms are better off going public during a hot issue
period.
Financial Markets and Corporate Strategy, David Hillier
Result 3.3
The advantages and disadvantages of going public are as follows.
Advantages:
better access to capital markets
shareholders gain liquidity
original owners can diversify
monitoring and information are provided by external capital markets
enhances the firm’s credibility with customers, employees and suppliers.
Disadvantages:
expensive
costs of dealing with shareholders
information revealed to competitors
public pressure.
In general, a firm should go public when the benefits of doing so exceed the costs.
Financial Markets and Corporate Strategy, David Hillier
Rights Issues
Financial Markets and Corporate Strategy, David Hillier
The Underwriting Arrangements
Financial Markets and Corporate Strategy, David Hillier
The Private Equity Market
Financial Markets and Corporate Strategy, David Hillier
Private Equity Attractiveness Index
Financial Markets and Corporate Strategy, David Hillier
Sources of Private Equity Financing
Financial Markets and Corporate Strategy, David Hillier
Major Private Equity Fundraisers
Financial Markets and Corporate Strategy, David Hillier
Breakdown of Private Equity Financing,
2002 - 2007
Financial Markets and Corporate Strategy, David Hillier
Stages of Financing
Financial Markets and Corporate Strategy, David Hillier
Private Equity Financing by Funding
Stage, 2007
Financial Markets and Corporate Strategy, David Hillier
IPOs by VC backed Biotech Firms
Financial Markets and Corporate Strategy, David Hillier
