ZOOM Essay on what distinguishes the IPO of a government-controlled firm from th
ID: 2546557 • Letter: Z
Question
ZOOM Essay on what distinguishes the IPO of a government-controlled firm from that of a private. controlled firm 1) In the first part of the essay, piease elaborate on what -in your opinion-the most important differences are when comparing the IPOs of state-owned enterprises(SOEs) versus private-owned firms. Elaborate on this, using about 1000 words. Structure your arguments in a number of paragraphs 2) In the second part, please elaborate on how those differences between state-controled firms and private-controlled firms that you identified under question t) might affecthe organization of the IPO process? Here, you need to pick out one aspect covered in my lecture on IPOs (for example: the timing of the offering, the setting of the offer price, the marketing and allocation of the shares, the process of price stabilization, etc Please select onel? so, the IPOs of a state-owned versus private-controled firm. Elaborate on this using about 500 words. Please, clearly explain your arguments choose ons of these topics and disc uss how it might be different acros NextExplanation / Answer
This paper examines performance effects of ownership concentration and two types of private
equity investors (venture capitalists and business angels) in firms that have recently
undergone an initial public offering (IPO) in the United Kingdom and France. We expand
and contextualize nascent understanding of multiple agency theory by examining
heterogeneity of private equity investors and by suggesting that multiple agency relationships
are affected by different institutional contexts. We employ a unique, hand-collected dataset of
224 matched IPOs (112 in each country). Controlling for the endogeneity of private equity
investors’ retained share ownership, we find support for the agency theory argument that
concentrated ownership improves IPO’s performance. The research also shows that the two
types of private equity investors have a differential impact on performance,
1-- Almost 40 years of economic reform in China have lead to remarkable growth and productivity. One major component of Chinese huge restructuring is the reform of State-owned enterprises (SOEs). The reform have brought down the economic importance of SOEs from approximately 80% to 30% during these years. SIP has naturally become the favorable approach used by Chinese government to meet the needs of the economic reform. By definition, SIP refers to the public offerings of common shares by firms with state ownership. By the share issuing privatizations, Chinese government could be able to bring down the SOEs shares in China’s gross domestic product.
State-owned enterprises are pillars and stones of Chinese economy. Through reformation since 1980s, it became more efficient and dynamic, changing the image of bureaucratic inefficiency. Indeed, it has to do with the unfair advantage of SOEs when public listing. In general, SOEs face less legal and political restrictions when going public. Moreover, SOEs could substantially reduce the underpricing level with government involvement, which decrease the most of the indirect costs.
An initial public offering, or IPO, is the very first sale of stock issued by a company to the public. Prior to an IPO the company is considered private, with a relatively small number of shareholders made up primarily of early investors (such as the founders, their families and friends) and professional investors (such as venture capitalists or angel investors). The public, on the other hand, consists of everybody else – any individual or institutional investor who wasn’t involved in the early days of the company and who is interested in buying shares of the company. Until a company’s stock is offered for sale to the public, the public is unable to invest in it. You can potentially approach the owners of a private company about investing, but they're not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of their shares to the public to be traded on a stock exchange. This is why an IPO is also referred to as "going public."
2--State owned enterprise is not wholly owned by govt funding . Some funding can from private sector or equity market .but the controlling interests are with the state
Govt owned enterprises are wholly funded by the govt run by the govt like railways . Govt invested funds govt runs the business model govt earns the revenues or profits as the case may be
At times the the terms are used interchangeably as the difference is marginal.
In both the enterprises the minimum requirement is that govt must have 51% ownership .
Basically these type of enterprises were set up in India immediately after independence as the Indian private sector was very small and not capable of investment in slow selling products
Thus under the industrial policy and as part of welfare state responsibilities central and state govts set up many such enterprises .once the private sector grew and their investments became diversified these state enterprises started losing their importance and they could not compete with private entities in terms of quality and service . Being inefficient from day one they started losing more and more money . Some were closed completely and in some disinvestment took place.
Yet some such enterprises picked up the challenge and became navratnas like IOC ONGC etc
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