Football club Paper_DONE! - TABLE OF CONTENTS Question 1...

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TABLE OF CONTENTS Question 1: Summary of the whole article ................................................................................. 2 Question 2 : What is IPO? What are the advantages and disadvantages of IPO to the football clubs? .......................................................................................................................................... 4 Question 3 : How do financial markets in general benefit an economic? .................................. 7 Question 4 : Explain the statement “markets enable the separation of ownership and management of the corporation, allowing an optimal allocation of scarce resources” .............. 9 Question 5 : Do you think football club can benefit from a stock market listing? How? If not, why? ........................................................................................................................................... 9 Question 6 : Explain the factors that contribute to the increment in the football clubs’ stock price .......................................................................................................................................... 11 Question 7 : Suggest other alternative modes of financing for the football clubs ................... 13 REFERENCES ......................................................................................................................... 16
Question 1 Summary of the whole article The article written by Dirk G Baur and Conor McKeating (2009) entitled The Benefits of Financial Markets: A Case Study of European Football Clubs discuss on the analysis on the performance of European football clubs that went public listing or more known as Initial Public Offering (IPO). The main purpose of the article was to see the effect of public listing towards the football clubs’ on field performance. The dataset consist of domestic and international performance before and after the football clubs went public. The article at first follows the observation of how the economy benefits from the financial markets. According to Baur and McKeating (2009), markets allow the company’s separation of ownership and management which enables it to obtain the scarce resources optimally. Not only that, it allows the company to obtain the capital at lowest cost for its investments and projects. This means that the companies or firms involved with financial markets should be benefiting from them. Even so, according to the empirical results, the football clubs do not reap benefits of being listed on stock market in general. Instead, it was shown that most clubs were performing worse after they went public (IPO) compared to before they do. The only ones who benefitted from the listing were the ones considered as smaller football clubs. In home leagues, majority of the football clubs do not perform better after the IPO compared to before that. On the opposite side, majority of the football clubs are seen to be performing slightly better after being publicly listed in the international league. Even so, the result of the performance for the international league is insignificant. 2 | P a g e
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Question 2 What is IPO? What are the advantages and disadvantages of IPO to the football clubs?

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