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The University of Southampton
Centre for Risk Research

Hong Kong Professor to Explain How to Manage Risks in Initial Public Share Offerings (IPOs) Event

Time:
13:00 - 14:00
Date:
15 October 2013
Venue:
Room 3041, Building 2, Southampton Management School

For more information regarding this event, please telephone Dr Ian Dawson on 02380 598094 or email i.g.dawson@soton.ac.uk .

Event details

In a forthcoming Centre for Risk Research seimnar, Professor Paul B. McGuinness of the Chinese University of Hong Kong will explain how investors can better manage risk and uncertainty when participating in Initial Public Share Offerings (IPOs).

Professor McGuinness will explore his latest research examining the valuable market price signals which can be obtained from initial public offerings of shares. He will examine ‘cornerstone' investor agreements, in which high net-worth individuals or organisations receive a guaranteed block of initial public offering (IPO) shares. Professor McGuinness shows that these cornerstone agreements provide important potential signals of IPO value. He argues that their recent emergence in the Hong Kong market setting, in tandem with detailed prospectus disclosures on such items, opens-up a new field of inquiry in the IPO information signaling arena. This is especially important given the pricing risk and general uncertainty issues confronting investors. Such risks are compounded for cornerstone parties, in light of the sizeable allocations and extensive lock-ups that apply.

Chinese University of Hong Kong

Professor McGuinness will demonstrate a strong link between the dimensions of such cornerstone agreements' (i.e., existence of the agreement, size, number of investing parties and lock-up period) and initial IPO value. He will also show that those organisations which launch with cornerstone-agreements exhibit stronger returns over the first thirty days of listing and display stronger post-listing earnings growth. Finally, in relation to other potential value signals, he reveals strong support for an underwriter prestige effect and qualified support for effects arising from secondary offers, earnings forecast disclosures and IPO underpricing.

Paul B. McGuinness is a Tenured Professor in the Department of Finance at CUHK, where he has served as Chairman of the Department for two extended terms. Prior to his appointment at CUHK, Professor McGuinness was a faculty member of the School of Industrial and Business Studies at the University of Warwick (UK). He has also held, while on leave from CUHK, positions as the National Bank Chair of Finance at the Victoria University of Wellington, New Zealand, Head of Research at the Hong Kong securities regulator, the Securities and Futures Commission, and Visiting Professor in the Department of Economics at Macquarie University in Sydney, Australia. He has published widely, including a book entitled ‘A Guide to the Equity Markets of Hong Kong', and has numerous published papers in internationally-refereed journals. He has also conducted consultancy work pertaining to securities market-related issues in Hong Kong and Mainland China.

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