This study investigates the factors that influence the completion of an initial public offering (IPOs) on the Australian Securities Exchange (ASX). We use a probit regression model to analysis the effect of News Coverage on withdrawal likelihood, we find that News Coverage around the time of an issuing firm’s IPO is positively related to IPO completion. News coverage enables a greater dissemination of information related to the company and the IPO, which in turn reduces information asymmetry. In line with previous finding of Boeh and Southam (2011), news articles also arguably signal lower agency costs and therefore can also be linked to a higher probability of IPO completion. Mahalanbis distance matching approach was adopted to match each company that withdrew its offering from the ASX with a similar company that had a successful IPO during the same period. We use this matching technique to explore partially underwritten IPOs, which is where only a proportion of an IPO is underwritten. We find that almost 20 percent of companies that were not underwritten withdrew their offerings, compared to less than 10 percent of companies that were partially underwritten. With a fully underwritten IPO, the underwriter who takes title to the firm’s shares would bare the risk of undersubscription and it appears that being partially underwritten would therefore remove at least some of this risk.
|Date of Award||7 Oct 2017|
|Supervisor||Colette Southam (Supervisor) & Baden U'Ren (Supervisor)|