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Effects of Rumours on IPO Success: A Qualitative Approach

The result's identifiers

  • Result code in IS VaVaI

    <a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216305%3A26510%2F17%3APU124395" target="_blank" >RIV/00216305:26510/17:PU124395 - isvavai.cz</a>

  • Result on the web

    <a href="https://ideas.repec.org/p/pes/wpaper/2017no79.html" target="_blank" >https://ideas.repec.org/p/pes/wpaper/2017no79.html</a>

  • DOI - Digital Object Identifier

    <a href="http://dx.doi.org/10.24136/eep.proc.2017.2" target="_blank" >10.24136/eep.proc.2017.2</a>

Alternative languages

  • Result language

    angličtina

  • Original language name

    Effects of Rumours on IPO Success: A Qualitative Approach

  • Original language description

    Research background: In epidemiology, qualitative models have been developed and applied to study the propagation of infectious diseases since the 1920s. A version of these models is based on the rumour propagation. The main idea behind these models is that spreading an infectious disease or disseminating information are analogous phenomena. Recently, this idea has been used in several areas to analyse how a rumour affects the financial industry. The success of going public depends on many aspects including the predictability and visibility of the initial public offering candidate, enormous growth potential and no signals of a failure. However, the wide public of investors might be reached by rumours affecting sig-nificantly the success of initial public offerings. Purpose of the article: This paper examines the impact of rumours on success or failure of initial public offerings. Rumours might significantly affect the decision-making of uninformed investors while considering investments in newly issued shares and thus are an important phenomenon within going public procedures. Methodology/methods: The ISS (Ignorant-Spreader-Stifler) model is applied to study the impact of rumours on initial public offering success or failure. We as-sume that the information asymmetry is one of the most important reasons for spreading rumours. A case study experiment is conducted in order to validate the model. Findings: Our analysis of spreading rumours suggests that if there is a qualitative model consisting of a set of scenarios and a transitional graph, the decision makers may predict the development of ignorants (I), spreaders (S) and stiflers (R) in time. In such a case, no variant is overlooked, i.e. the model covers all possible changes of the situation in time. Supposing that rumours are under control of the issuing company, i.e. if detected in a timely manner and effective actions are introduced by decision makers, any reputational damages and thus initial public offering f

  • Czech name

  • Czech description

Classification

  • Type

    D - Article in proceedings

  • CEP classification

  • OECD FORD branch

    50201 - Economic Theory

Result continuities

  • Project

  • Continuities

    S - Specificky vyzkum na vysokych skolach<br>I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Others

  • Publication year

    2017

  • Confidentiality

    S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Data specific for result type

  • Article name in the collection

    Proceedings of the 9th International Conference on Applied Economics Contemporary Issues in Economy

  • ISBN

    978-83-65605-05-4

  • ISSN

  • e-ISSN

  • Number of pages

    16

  • Pages from-to

    116-131

  • Publisher name

    Institute of Economic Research

  • Place of publication

    Toruń, Poland

  • Event location

    Toruń, Poland

  • Event date

    Jun 22, 2017

  • Type of event by nationality

    WRD - Celosvětová akce

  • UT code for WoS article