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2.1.8 Characteristic of Firms in Choosing The Marketing Method
This
paper
will
also
determine
whether
or not
there
are
any
differences
in
choosing
marketing
methods
for IPOs
based
on the
firm’s
characteristics.
According
to
Chemmanur
and
Paeglis
(2004),
the
quality
of
a firm
and
management
is
measured,
based
on
the
value
of
the
company,
which
includes
the stakeholders
such as the employee,
shareholders,
customers,
and the
industry
of
the
business.
Each
of
these
stakeholders
has
their
own
corporate
image
embedded
to
their
firms.
Better
management
can
signal
a
value
of
the
firms to outsiders, which might reduce
information asymmetry regarding
their
firms
in the capital
market
(Chemmanur
& Paeglis,
2004).
These
characteristics
might influence the post-IPO performance.
The
quality
of
a
firm
could
affect
the
IPO
market
in
several
ways.
A
firm
with
good
quality
and
reputation
of
management
are able
to
signal
the
value
of their firm. Especially
in the capital market,
when the senior
managers
have
repeatedly
deals
with
the
financial
markets,
it
will
increase
the
value
of
their
firms in the public eyes (Welch, 1989). Firms with higher quality
management have
a
lower
extent
of
information asymmetry since
they
are
able to certify the value of the firm better (Chemmanur et al, 2010).
Information
asymmetry
is one
of
the
major
reasons
why
IPOs
results
in
underpricing.
Book
building
method
has
been
proven
that
it
will
reduce
the
information
asymmetry
by
having
the quality
of price
discovery
(Benveniste
&
Busaba,
1997).
Company
who
wants
to
go
public
will
issue
a
prospectus;
prospectus
will
include
information
about
the
company,
which
will
signal
the
value of the issuer’s quality. Potential investors will gain insight on the
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