Effects of Rumours on IPO Success: A Qualitative Approach

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

Effects of Rumours on IPO Success: A Qualitative Approach

Popis výsledku v původním jazyce

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

Název v anglickém jazyce

Effects of Rumours on IPO Success: A Qualitative Approach

Popis výsledku anglicky

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

Druh

D - Stať ve sborníku

CEP obor

—

OECD FORD obor

50201 - Economic Theory

Projekt

—

Návaznosti

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

Rok uplatnění

2017

Kód důvěrnosti údajů

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

Název statě ve sborníku

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

ISBN

978-83-65605-05-4

ISSN

—

e-ISSN

—

Počet stran výsledku

16

Strana od-do

116-131

Název nakladatele

Institute of Economic Research

Místo vydání

Toruń, Poland

Místo konání akce

Toruń, Poland

Datum konání akce

22. 6. 2017

Typ akce podle státní příslušnosti

WRD - Celosvětová akce

Kód UT WoS článku

—