F423c1 - FIN 423 IPO Cases, 1992-present Some cases are for...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: FIN 423 IPO Cases, 1992-present Some cases are for IPOs that have already happened, some are "real-time" Teams are assigned to represent either management or underwriters Two phases: negotiation occurs valuation report prepared FIN 423 IPO Cases, 1992-present Some years, the negotiation pairings are assigned (bilateral monopoly) Other years, teams are allowed to find any team on the other side of the case (competition) FIN 423 IPO Cases, 1992-present Lessons: systematic bias in valuation results as a function of the incentives initial position (bid or ask) seems to be unrelated to final price competition seems to have a stabilizing effect on prices negotiation success is not always related to the quality of the reports FIN 423 IPO Case Negotiations (Initial & Final Offers) 1992 Bilateral Monopoly 30 Initial Ask Initial Bid Final Ask Final Bid 25 IPO Price of Sybron Failed negotiation 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1993 Competition 35 Initial Ask Initial Bid Final Ask Final Bid 30 IPO Price of Allstate 25 20 15 10 Evidence of collusion??? 5 0 1 2 3 4 5 6 7 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1994 Bilateral Monopoly 30 Initial Ask Initial Bid Final Ask Final Bid Failed negotiation 25 IPO Price of NWA 20 15 10 5 0 1 2 3 4 5 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1995 Competition 16 14 12 10 8 6 4 2 0 1 2 3 4 5 6 7 8 9 10 Initial Ask Initial Bid Final Ask Final Bid Failed negotiation IPO Price of Geerlings & Wade Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1995 Competition 16 14 Initial Ask Initial Bid Final Ask Final Bid Report Diff Failed negotiation 140 120 100 80 60 40 20 0 -20 IPO Price of Geerlings & Wade 12 10 8 6 4 2 0 1 2 3 4 5 6 7 8 9 10 Negotiation # Difference in Report Scores FIN 423 IPO Case Negotiations (Initial & Final Offers) 1996 Bilateral Monopoly 70 Initial Ask Initial Bid Final Ask Final Bid 60 IPO Price of Netscape 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1996 Bilateral Monopoly 70 Initial Ask Initial Bid Final Ask Final Bid Report Diff 300 60 250 IPO Price of Netscape 50 200 40 150 30 100 20 50 10 0 0 1 2 3 4 5 6 7 8 9 10 -50 Negotiation # Difference in Report Scores FIN 423 IPO Case Negotiations (Initial & Final Offers) 1997 Competition 30 Initial Ask Initial Bid Final Ask Final Bid 25 IPO Price of Amazon 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1997 Competition 30 Initial Ask Initial Bid Final Ask Final Bid Report Diff 300 250 25 IPO Price of Amazon 200 20 150 15 100 10 50 5 0 0 1 2 3 4 5 6 7 8 9 10 -50 Negotiation # Difference in Report Scores FIN 423 IPO Case Negotiations (Initial & Final Offers) 1998 Bilateral Monopoly 25 Initial Ask Initial Bid Final Ask Final Bid Failed negotiation 20 IPO Price of CRA 15 10 5 0 1 2 3 4 5 6 7 8 9 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1998 Bilateral Monopoly 25 Initial Ask Initial Bid Final Ask Final Bid Report Diff 80 Failed negotiation Difference in Report Scores 20 60 IPO Price of CRA 15 40 10 20 5 0 0 1 2 3 4 5 6 7 8 9 -20 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1999 Competition 60 Initial Ask Initial Bid Final Ask Final Bid 55 IPO Price of GS 50 45 40 35 30 1 2 3 4 5 6 7 8 9 10 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 1999 Competition 60 Initial Ask Initial Bid Final Ask Final Bid Report Diff 90 55 70 IPO Price of GS 50 50 45 30 40 10 35 -10 30 1 2 3 4 5 6 7 8 9 10 -30 Negotiation # Difference in Report Scores FIN 423 IPO Case Negotiations (Initial & Final Offers) 2000 Bilateral Monopoly 60 Initial Ask Initial Bid Final Ask Final Bid IPO Value of Tycom ($ Billion) 50 40 30 20 10 0 1 2 3 4 5 6 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 2000 Bilateral Monopoly 60 Initial Ask Initial Bid Final Ask Final Bid Report Diff 100 IPO Value of Tycom ($ Billion) 50 80 40 60 30 40 20 20 10 0 0 1 2 3 4 5 6 -20 Negotiation # Difference in Report Scores FIN 423 IPO Case Negotiations (Initial & Final Offers) 2001 Competition 14 Initial Ask Initial Bid Final Ask Final Bid IPO Value of Instinet ($/Share) 13 12 11 1 2 3 4 5 6 Negotiation # FIN 423 IPO Case Negotiations (Initial & Final Offers) 2001 Competition 14 Initial Ask Initial Bid Final Ask Final Bid Report Diff 100 IPO Value of Instinet ($/Share) 80 13 60 40 12 20 0 11 1 2 3 4 5 6 -20 Negotiation # Difference in Report Scores FIN 423 Case #1, Report Points (Max = 75, Avg = 69.3, Std= 3.3) 30 25 Number of Students 20 15 10 5 0 64 67 70 73 Scores Less than or Equal to (but Greater than prior group) FIN 423 Case #1, Total Points (Max = 100, Avg = 89.7, Std= 5.4) 16 14 Number of Students 12 10 8 6 4 2 0 82 85 88 91 94 97 Scores Less than or Equal to (but Greater than prior group) Return to FIN 423 Home Page http://schwert.ssb.rochester.edu/f423/f423main.htm ...
View Full Document

This note was uploaded on 03/03/2010 for the course FIN 423 taught by Professor Schwert during the Spring '08 term at Rochester.

Ask a homework question - tutors are online