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Estudios de economía

versión On-line ISSN 0718-5286

Estudios de Economía vol.47 no.2 Santiago dic. 2020 


Valuing local and dual-class IPOs in the Alternative Investment Market

Valoración de Ofertas Públicas de Venta (IPO) en el Mercado Alternativo de Inversiones

Abdul Wahid1 

Muhammad Zubair Mumtaz2 

Edmund Mantell3 

1School of Business, National University of Modern Languages (NUML). Islamabad, Pakistan

2School of Social Sciences and Humanities (S3H), National University of Science and Technology (NUST). Islamabad, Pakistan

3Lubin School of Business, Pace University. New York, USA


Initial Public Offerings are, by definition, not seasoned securities. They have not been subjected to valuation by the community of investors. It is often difficult or impossible to forecast their future cash flows because most do not have a long history of publicly disclosed financial information. Consequently, valuing IPOs in any market is more difficult than valuing seasoned equities. In this paper, we address the valuation of IPOs in the Alternative Investment Market, (hereafter the AIM.) The purpose of this study is to determine the observable factors that affect valuation in the AIM. We apply OLS, LASSO regression, and Extreme Bounds Analysis (EBA) techniques on historical accounting data to test our theory of valuation. The statistical sample consists of 2,185 IPOs issued on the AIM between 1995 and 2020. Our findings suggest that the market valuation of IPOs in the AIM is systematically related to a multiplicity of factors. These include earnings per share (EPS) in the after-market, operating cash follow per share, and the percentage of shares issued to the public. The findings of the study have a practical value for investors who are interested in buying IPOs in the AIM.

Keywords: Valuation of IPOs; AIM; Dual-class IPOs; LASSO regression; Extreme Bounds Analysis


Las ofertas iniciales de venta al público (IPOs), por definición, no tienen historia y no han sido valoradas por inversionistas. Por ello, es difícil o imposible realizar proyecciones de flujos futuros, al no existir información financiera pública. Este trabajo centra la valoración en el Mercado de alternativo de inversiones, determinando los observables que afectan la valoración. Aplicamos distintas técnicas econométricas a datos contables de 2,185 IPOs entre los años 1995 y 2020. Nuestros resultados sugieren que las valoraciones se relacionan con diversos factores.

Palabras clave: Valoración; IPOs; Regresión LASSO; Análisis de límites extremos

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Received: June 0, 2020; Accepted: August 0, 2020

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