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Journal of Economics and Finance

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04.05.2018

People have the power: post IPO effects of intellectual capital disclosure

verfasst von: Cristiana Cardi, Camilla Mazzoli, Sabrina Severini

Erschienen in: Journal of Economics and Finance | Ausgabe 2/2019

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Abstract

We study the effects of disclosure practices regarding non-financial information in Initial Public Offering (IPO) prospectuses on the post IPO stock performance. Previous literature is in short supply of evidences regarding the effect of Intellectual Capital (IC) disclosure on the long-run IPO performance and it also provides inconsistent results, possibly due to the different IC classifications that are employed and to a variety of omitted concurrent factors which could befog the effect of the IC disclosure. In this paper, we disengage from any ready-made classification of IC and we shed light on the effects that unbiased IC information exert on the post IPO stock performance. In particular, we consider all the IC information that is provided in the listing prospectus of a sample of firms recently listed on Borsa Italiana by considering a series of 87 variables, as suggested by (Cordazzo J Intellect Cap 8(2):288-305, 2007) and we apply a principal component analysis to such information thus overcoming the subjectivity of any possible classification. The revealed IC components are then included in a multivariate analysis explaining the long-term IPO stock performance. We also include a wide set of variables to control for the short-term performance, the quality of the firm and other factors which could blur the effect of IC disclosure on the long run performance. Our empirical evidences show that information regarding the human resources and the information technology activities disclosed in the IPO prospectus continue to exert their positive effect on the behavior of secondary market investors in the 12 months that follow the IPO. Moreover, the information regarding the human resources is positively linked to the 36 months’ performance as well. Such a result underlines the key role that people have in the perception of a firm’s value in the IPOs setting, thus confirming that human resources are recognized as being very important contributors to the competitive advantage of corporations.

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See (Bukh et al. 2005) (in relation to Danish IPO prospectuses), (Cardi and Mazzoli 2015; Cordazzo 2007) (on Italian IPO prospectuses), (Nielsen et al. 2015) (on Japanese IPO prospectuses) and (Singh and Van der Zahn 2007) (on Singaporean IPO prospectuses).

Many sources recommend mineigen(1), although the justification is complex and uncertain. For a review of the PCA and Factor Analysis methods see (Hair et al. 2005).

Matrix rotation is useful to provide easier interpretation of results. Orthogonal varimax rotation is the most common rotational technique used in factor analysis, especially when factors are used as explanatory variables in regression analysis. Varimax rotation produces factor structures that are uncorrelated, and it maximizes the sum of the squared factor loadings across the columns. This tends to force each variable to load highly on as few factors as possible (Hair et al. 2005).

Table 7 in the Appendix is the Rotated Component Matrix, which shows the rotated factor loadings. Since factor loadings are the expression of the relationship of each component (in the columns) to the underlying variables (in the rows), the rotated component matrix helps to determine what the components represent. Moreover, in Appendix Table 8 we show the Cumulative Explained Variance that indicates 80.43% of the variation is explained by the extracted components.

The Intellectual Capital Disclosure Index (ICDI) is calculated starting from the IC information provided in the IPO prospectus. More information is available upon request to the authors.

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Titel: People have the power: post IPO effects of intellectual capital disclosure
verfasst von: Cristiana Cardi
Camilla Mazzoli
Sabrina Severini
Publikationsdatum: 04.05.2018
Verlag: Springer US
Erschienen in: Journal of Economics and Finance / Ausgabe 2/2019
Print ISSN: 1055-0925
Elektronische ISSN: 1938-9744
DOI: https://doi.org/10.1007/s12197-018-9439-9

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