Does intellectual capital disclosure reduce an IPO's cost of capital? The case of underpricing

Journal of Intellectual Capital

Volumn 8, Issue 3, 2007, Pages 494-516

  Singh, Inderpal ^a   Van der Zahn, J L W Mitchell ^a  

^a CURTIN UNIVERSITY   (Australia)

Author keywords

Cost of capital; Denmark; Disclosure; Intellectual capital; Pricing; Singapore

Indexed keywords

EID: 34547766681     PISSN: 14691930     EISSN: None     Source Type: Journal    
DOI: 10.1108/14691930710774885     Document Type: Article

References (68)

1. Allen, F. and Faulhaber, G.R. (1989), "Signaling by underpricing in the IPO market", Journal of Financial Economics, Vol. 23, pp. 303-23.
2. Amir, E. and Lev, B. (1996), "Value-relevance of nonfinancial information: The wireless communication industry", Journal of Accounting and Economics, Vol. 22 No. 1, pp. 3-30.
3. Barney, J. (1991), "Types of competition and the theory of strategy: Towards an integrative framework", Academy of Management Review, Vol. 11 No. 4, pp. 791-800.
4. Beatty, R.P. and Ritter, J.R. (1986), "Investment banking, reputation and the underpricing of initial public offerings", Journal of Financial Economics, Vol. 15, pp. 213-32.
5. Beaulieu, P., Williams, S.L.M. and Wright, M. (2002), "Intellectual capital disclosure practices in Sweden", in Bontis, N. (Ed.), Organizational Intelligence: The Cutting Edge of Intellectual Capital and Knowledge Management, Butterworth-Heinemann, Toronto.
6. Benveniste, L.M., Ljungqvist, A., Wilhelm, W.J. and Yu, X. (2003), "Evidence of information spillovers in the production of investment banking services", Journal of Finance, Vol. 58, pp. 577-608.
7. Blair, M. and Wallman, S. (2000), Unseen Wealth, The Brookings Institution, Washington, DC.
8. Bontis, N. (2001), "Assessing knowledge assets: A review of the models used to measure intellectual capital", International Journal of Management Reviews, Vol. 3 No. 1, pp. 41-60.
9. Bose, S. and Oh, K.B. (2004), "Measuring strategic value-drivers for managing intellectual capital", The Learning Organization: An International Journal, Vol. 11 Nos 4/5, pp. 347-56.
10. Botosan, C.A. (1997), "Disclosure level and the cost of equity capital", The Accounting Review, Vol. 72 No. 3, pp. 323-49.
11. Bukh, P.N., Nielsen, C., Gormsen, P. and Mouritsen, J. (2005), "Disclosure of information on intellectual capital in Danish IPO prospectuses", Accounting, Auditing & Accountability Journal, Vol. 18 No. 6, pp. 713-32.
12. Carter, R.B., Dark, F.H. and Singh, A.K. (1998), "Underwriter reputation, initial returns and the long-run performance of IPO stocks", Journal of Finance, Vol. 53, pp. 285-311.
13. Carter, R.B. and Manaster, S. (1990), "Initial public offerings and underwriter reputation", Journal of Finance, Vol. 45, pp. 1045-67.
14. Clarkson, P.M., Dontoh, A., Richardson, G.D. and Sefcik, S.E. (1992), "The voluntary inclusion of earnings forecasts in IPO prospectuses", Contemporary Accounting Research, Vol. 8 No. 2, pp. 601-26.
15. Coller, M. and Yohn, T.L. (1997), "Management forecasts and information asymmetry: An examination of bid-ask spreads", Journal of Accounting Research, Vol. 35 No. 2, pp. 181-91.
16. Cooke, T.E. (1991), "An assessment of voluntary disclosure in the annual reports of Japanese corporations", The International Journal of Accounting, Vol. 26 No. 2, pp. 174-89.
17. Demers, E. and Lewellen, K. (2003), "The marketing role of IPOs: evidence from internet stocks", Journal of Financial Economics, Vol. 68, pp. 413-37.
18. Diamond, D.W. and Verrechia, R.E. (1991), "Disclosure, liquidity and the cost of equity capital", Journal of Finance, Vol. 46 No. 4, pp. 1325-59.
19. Downes, D. and Heinkel, R. (1982), "Signalling and the valuation of unseasoned new issues", Journal of Finance, Vol. 37 No. 1, pp. 1-10.
20. Firth, M. and Liau-Tan, C. (1998), "Auditor quality, signalling and the valuation of initial price offerings", Journal of Business, Finance and Accounting, Vol. 25, pp. 145-65.
21. Friedlan, J.M. (1993), "Accounting information and the pricing of initial public offerings", working paper, York University, York.
22. Galbraith, C.S. and Merrill, G.B. (2001), "IPO performance in business to business 'B2B' e-commerce firms: Effects of strategy and industry", Managerial Finance, Vol. 27 No. 7, pp. 1-15.
23. Garcia-Meca, E., Parra, I., Larran, M. and Martinez, I. (2005), "The explanatory factors of intellectual capital disclosure to financial analysts", The European Accounting Review, Vol. 14 No. 1, pp. 63-94.
24. Gelb, D.S. (2002), "Intangible assets and firms' disclosures: An empirical investigation", Journal of Business, Finance and Accounting, Vol. 29 Nos 3/4, pp. 457-76.
25. Gongmeng, C., Firth, M. and Kim, J.B. (2004), "IPO underpricing in China's new stock markets", Journal of Multinational Financial Management, Vol. 14 No. 2, pp. 283-302.
26. Greene, W. (1999), Econometric Analysis, 4th ed., Prentice-Hall, Englewood Cliffs, NJ.
27. Grinblatt, M. and Hwang, C. (1989), "Signaling and the underpricing of new issues", Journal of Finance, Vol. 24, pp. 13-31.
28. Guo, R., Lev, B. and Zhou, N. (2004), "Competitive costs of disclosure by biotech IPOs", Journal of Accounting Research, Vol. 42 No. 2, pp. 319-55.
29. Hair, J.F., Anderson, R.E., Tatham, R.L. and Black, W.C. (1995), Multivariate Data Analysis, 4th ed., Prentice-Hall, Englewood Cliffs, NJ.
30. Healy, P.M., Hutton, A.P. and Palepu, K.G. (1999), "Stock performance and intermediation changes surrounding sustained increases in disclosure", Contemporary Accounting Research, Vol. 16 No. 3, pp. 485-520.
31. Ho, C.W.P. and Williams, S.L.M. (2003), "International comparative analysis of the association between board structure and the efficiency of value added by a firm from its physical capital and intellectual capital resources", International Journal of Accounting, Vol. 38 No. 4, pp. 465-91.
32. Ittner, C.D., Lambert, R.A. and Larcker, D.F. (2003), "The structure and performance consequences of equity grants to employees of new economy firms", Journal of Accounting and Economics, Vol. 34 No. 1, pp. 89-127.
33. Jog, V. and McConomy, B.J. (2003), "Voluntary disclosure of management earnings forecasts in IPO prospectuses", Journal of Business, Finance and Accounting, Vol. 30 Nos 1/2, pp. 125-67.
34. Kim, J.B., Krinsky, I. and Lee, J. (1993), "Motives for going public and underpricing: New findings from Korea", Journal of Business, Finance and Accounting, Vol. 20, pp. 195-211.
35. Kim, O. and Verrechia, R.E. (1994), "Market liquidity and volume around earning announcements", Journal of Accounting and Economics, Vol. 17 No. 1, pp. 41-67.
36. Koh, F. and Walter, T. (1989), "A direct test of Rock's model and the pricing of unseasoned issue", Journal of Financial Economics, Vol. 23, pp. 251-72.
37. Lang, M.H. and Lundholm, R.J. (1993), "Cross-sectional determinants of analyst ratings of corporate disclosures", Journal of Accounting Research, Vol. 31 No. 2, pp. 246-71.
38. Lang, M.H. and Lundholm, R.J. (1996), "Corporate disclosure policy and analyst behaviour", The Accounting Review, Vol. 71 No. 4, pp. 467-92.
39. Lang, M.H. and Lundholm, R.J. (2000), "Voluntary disclosure and equity offerings: Reducing information asymmetry or hyping the stock?", Contemporary Accounting Research, Vol. 17 No. 4, pp. 623-62.
40. Lee, P.J., Taylor, S.L. and Walter, T.S. (1996), "Expected and realised returns for Singaporean IPOs: Initial and long-run analysis", Pacific-Basin Finance Journal, Vol. 4, pp. 153-80.
41. Leone, A.J., Rock, S. and Willenborg, M. (2003), "Mandatory voluntary disclosure: The intended use of proceeds in initial public offerings", working paper, University of Michigan, Ann Arbor, MI.
42. Leuz, C. and Verrechia, R.E. (2000), "The economic consequence of increased disclosure", Journal of Accounting Research, Vol. 38, Supplement, pp. 91-135.
43. Lev, B. (2001), Intangibles, Management, Measurement and Reporting, The Brookings Institution, Washington, DC.
44. Lev, B. and Sougiannis, T. (1996), "The capitalization, amortization and value-relevance of R&D", Journal of Accounting and Economics, Vol. 21 No. 1, pp. 107-38.
45. Lev, B. and Zarowin, P. (1999), "The boundaries of financial reporting and how to extend them", Journal of Accounting Research, Vol. 37 No. 2, pp. 353-85.
46. Ljungqvist, A. (2005), "IPO underpricing", in Eckbo, B.E. (Ed.), Handbook of Corporate Finance: Empirical Corporate Finance, Elsevier/North-Holland, New York, NY.
47. Ljungqvist, A. and Wilhelm, W.J. (2002), "Allocations: discriminatory or discretionary?", Journal of Financial Economics, Vol. 65, pp. 167-201.
48. Loughran, T. and Ritter, J.R. (2002), "Why don't issuers get upset about leaving money on the table in IPOs?", Review of Accounting Studies, Vol. 15, pp. 413-43.
49. Loughran, T. and Ritter, J.R. (2004), "Why has IPO underpricing increased over time?", Financial Management, Vol. 33, pp. 5-37.
50. Lyn, E.O. and Zychowicz, E.J. (2003), "The performance of new equity offerings in Hungary and Poland", Global Finance Journal, Vol. 14, pp. 181-95.
51. McNicholas, M. and Trueman, B. (1994), "Public disclosure, private information collection and short-term trading", Journal of Accounting and Economics, Vol. 17, pp. 69-94.
52. Marston, C. and Shrives, P. (1991), "The use of disclosure indices in accounting research: A review article", The British Accounting Review, Vol. 23 No. 2, pp. 195-210.
53. Megginson, W. and Weiss, K.A. (1991), "Venture capitalist certification in initial public offerings", Journal of Finance, Vol. 46, pp. 879-903.
54. Murphy, K.J. (2003), "Stock-based pay in new economy firms", Journal of Accounting and Economics, Vol. 34 No. 1, pp. 129-47.
55. Netter, J., Wasserman, W. and Kutner, M.H. (1989), Applied Regression Models, Irwin, Homewood, IL.
56. Ofek, E. and Richardson, M. (2003), "Dot-com mania: The rise and fall of internet stock prices", Journal of Finance, Vol. 58, pp. 1113-38.
57. Page, M. and Reyneke, I. (1997), "The timing and subsequent performance of initial public offerings (IPOs) on the Johannesburg Stock Exchange", Journal of Business, Finance and Accounting, Vol. 24, pp. 1401-20.
58. Ritter, J.R. (1984), "The 'hot issue' market of 1980", Journal of Business, Vol. 57 No. 2, pp. 215-40.
59. Ritter, J.R. and Welch, I. (2002), "A review of IPO activity, pricing and allocations", Journal of Finance, Vol. 57 No. 4, pp. 1795-828.
60. Schrand, C. and Verrechia, R.E. (2004), "Disclosure choice and cost of capital: Evidence from underpricing in initial public offerings", working paper, The Wharton School, University of Pennsylvania, Philadelphia, PA.
61. Scott, W. (2000), Financial Accounting Theory, 2nd ed., Prentice-Hall Canada, Scarborough.
62. Sengupta, P. (1998), "Corporate disclosure quality and the cost of debt", The Accounting Review, Vol. 73 No. 4, pp. 459-74.
63. Starovic, D. and Marr, B. (2003), Understanding Corporate Value - Measuring and Reporting Intellectual Capital, Chartered Institute of Management Accountants, London.
64. Verrechia, R.E. (2001), "Essays on disclosure", Journal of Accounting and Economics, Vol. 32 Nos 1-3, pp. 97-180.
65. Welch, I. (1989), "Seasoned offerings, imitation costs and the underpricing of initial public offerings", Journal of Finance, Vol. 44, pp. 421-49.
66. Welker, M. (1995), "Disclosure policy, information asymmetry and liquidity in equity markets", Contemporary Accounting Research, Vol. 11 No. 2, pp. 801-27.
67. Williams, S.L.M. (2001), "Is intellectual capital performance and disclosure practices related?", Journal of Intellectual Capital, Vol. 2 No. 3, pp. 192-203.
68. Zambon, S. (2003), Study on the Measurement of Intangible Assets and Associated Reporting Practices, Commission of the European Communities Enterprise Directorate General, Brussels.