IPO case study Example | Topics and Well Written Essays - 1250 words

IPO - Case Study ExampleMost companies and opinions believe that the new stratum brings forth the increased earning potentiality of shares. In addition to this, most companies pay out bonuses and dividends as the course of instruction comes to a close. This then means that investors might have funds to participate in the initial macrocosm offering.v) The decision to involve the selected underwriters might have been well informed and carefully selected. The selected underwriters might have direct a peremptory message to the investors and thence increasing their trust and hope in the companys prospective earnings.vi) In my informed opinion, the cost charged was fair bearing in mind the positive past track record of the underwriting companies chosen. This therefore could have influenced positively the decisions of the investors to participate on the public offering. Investor confidence on the parties involved is all it takes for a success in the initial public offering. I there fore believe that the compensation was fair and appropriate.vii) The overallotment offer to the underwriters acts like an incentive for them since they can use the overallotment funds to restore some quick profits in the financial market as the allotment funds bide to be returned back to investors.viii) The choice of the companys listing venue was appropriate. NASDAQ is one of the leading var. markets in the world. Therefore, any company that lists there is regarded and perceived as a potential goldmine for the investors. This therefore influenced positively the decision of the investors to participate in the initial public offer. In addition, the venue has different categories where takings companies can list according to their interests and prospects.ix) When companies issue shares to the public, the public is normally hopeful about the growth potential of the stock. This positive mindset and feedback might have resulted in an increase in the share price on the first day of tr ading. However, after