Cornerstone-invested IPOs in Asian Markets Herald Wider Implications for Investors

A ground-breaking research reveals the important role of cornerstone investors in Asian stock markets and their influence on a firm’s IPO value. Find out more in a feature article published in Indian Management magazine by Prof. Paul B. McGuinness.

The Chinese University of Hong Kong (CUHK) Business School’s Marketing and Communications Office disseminated the China Business Knowledge (CBK) feature article titled “Cornerstone Investment: A Fast-growing Trend” to more than 539 journalists/9491 distribution points in the United States and across 20 countries in Asia Pacific.

The article was written based on a research paper entitled “IPO firm value and its connection with cornerstone and wider signalling effects,” published in the Pacific-Basin Finance Journal  in 2014. The author of the paper is Paul B. McGuinness, Professor of Department of Finance at CUHK Business School. The article has been widely picked up by the media around the world with 247 clippings generated so far, including Bloomberg NewsChina Money Network, MarketWatch, MSN, SinaThomson ReutersYahoo! Finance and more. The campaign has also successfully drawn media attention on research conducted at CUHK Business School.

One of the positive media responses came from the All India Management Association (AIMA)’s monthly journal Indian Management. The journal is one of India’s leading management periodicals that bring new concepts of management to a large number of practicing managers. It has invited Prof. McGuinness to contribute an article based on his research paper.

In the article contributed to Indian Management magazine, Prof. McGuinness states that subscribers to initial public offerings (IPOs) in Asian markets have witnessed an increasing participation by cornerstone investors in recent years. His study focused on IPOs on the Hong Kong Exchanges and Clearing Limited (HKEx) between 2005 and 2009. During this period, nearly one-third of the issuers listed on HKEx’s Main Board had cornerstone presence.

Prof. McGuinness’ research demonstrates that cornerstone agreements support higher market-to-book and Tobin’s Q valuations at IPO launch. This evidence supports a purported signalling or “certification” effect. The study confirms such properties in relation to listed firms’ post-IPO profit trajectory, with cornerstone-invested entities experiencing stronger after-market earnings… Read More

Prof. McGuinness’ article was published in the Indian Management magazine’s February 2016 issue. Please click the images below to read the full article.

Source: Indian Management
Date published: February 2016

About AIMA
AIMA is the national association of the management profession in India. AIMA has a broad base of 65 Local Management Associations, including two cooperating LMAs abroad, with a membership crossing 30,000 in number. AIMA is a non-lobbying organization, working closely with Industry, government, academia and students to further the cause of the management profession in India. AIMA is represented on the boards of India’s premier business institutions like the Indian Institute of Management–IIMs. AIMA is also represented on the boards of government bodies including the All India Council for Technical Education, National Board of Accreditation, National Productivity Council, to name just a few.