Price Determination in Public Offering and Evaluation Methods

Price Determination in Public Offering and Evaluation Methods

Ümit Hacıoğlu (Istanbul Medipol University, Turkey), Hasan Dinçer (Istanbul Medipol University, Turkey) and Zuhal Akça (Beykent University, Turkey)
DOI: 10.4018/978-1-4666-7288-8.ch010
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Abstract

The latest financial situation in capital markets in advanced economies, emerging markets, and the Euro zone illustrates that volatility and risks related to global economic activity and global financial markets have impact on local capital markets and directly affects the value of company stocks even though an investor diversified his/her risk by investing in a portfolio. The initial public offering process, performance evaluation methods, and price determination became key factors for companies and investors. In this chapter, advantages and disadvantages of IPO, pricing methods and performance evaluation methods are assessed.
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Initial Public Offering And Pros And Cons For Companies

The latest economic turmoil once more illustrated the fact that financing strategies are pioneering tools for top managers before and after fluctuations. Companies developing long term growth and sustainable development programs are determining their strong capital financing tactics. Public offering in developing economies is an effective way to obtain long term funds with lowest cost and highest interest abroad.

When the development of the capital markets and exchanges are studied it can easily be seen that the importance of the public offering in our country’s economy is increasing. One of the main reasons of this is the decrease in the income gained from the alternative investment sources due to the effect of crises and the current global crisis. The benefits provided to the company by public offering are explained below (TUYID, 2014; SPK; Ayoğlu, 2006, pp.89-90):

Key Terms in this Chapter

Public Offering Period: Once the company owners reached the decision of public offering, they are required to get their company ready for public offering immediately. In this situation; procedures covering both application and legal obligations will be implemented. The companies which are to implement public offering, should pass certain levels, carry out the stipulated preparations and get professional help during this period.

Performance Measurement: Is the process of collecting, analyzing and/or reporting information regarding the performance of an individual, group, organization, system or component.

Balanced Scorecard: Is a strategy performance management tool - a semi-standard structured report, supported by design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.

The Importance of The Initial Public Offering: The latest economic turmoil once more illustrated the fact that financing strategies are pioneering tools for top managers before and after fluctuations. Companies developing long term growth and sustainable development programs are determining their strong capital financing tactics. Public offering in developing economies is an effective way to obtain long term funds with lowest cost and highest interest abroad.

Performance Management: Includes activities which ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas.

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