Initial public offering
Although IPO offers many benefits, there are also significant costs involved, chiefly those associated with the process such as banking and legal fees, and the ongoing requirement to disclose important and sometimes sensitive information.[3] Like modern joint-stock companies, the publicani were legal bodies independent of their members whose ownership was divided into shares, or parts.[4] There is evidence that these shares were sold to public investors and traded in a type of over-the-counter market in the Forum, near the Temple of Castor and Pollux.Mere evidence remains of the prices for which parts were sold, the nature of initial public offerings, or a description of stock market behavior.This ability to quickly raise potentially large amounts of capital from the marketplace is a key reason many companies seek to go public.Financial historians Richard Sylla and Robert E. Wright have shown that before 1860 most early U.S. corporations sold shares in themselves directly to the public without the aid of intermediaries like investment banks.At the time of the stock launch, after the Registration Statement has become effective, indications of interest can be converted to buy orders, at the discretion of the buyer.[17] Before legal actions initiated by New York Attorney General Eliot Spitzer, which later became known as the Global Settlement enforcement agreement, some large investment firms had initiated favorable research coverage of companies in an effort to aid corporate finance departments and retail divisions engaged in the marketing of new issues.A company planning an IPO typically appoints a lead manager, known as a bookrunner, to help it arrive at an appropriate price at which the shares should be offered.If a stock is offered to the public at a higher price than the market will pay, the underwriters may have trouble meeting their commitments to sell shares.[19] The process of determining an optimal price usually involves the underwriters ("syndicate") arranging share purchase commitments from leading institutional investors.Large IPO auctions include Japan Tobacco, Singapore Telecom, BAA Plc and Google (ordered by size of proceeds).[24] Traditional U.S. investment banks have shown resistance to the idea of using an auction process to engage in public securities offerings.The auction method allows for equal access to the allocation of shares and eliminates the favorable treatment accorded important clients by the underwriters in conventional IPOs.An article in the Wall Street Journal cited the reasons as "broader stock-market volatility and uncertainty about the global economy have made investors wary of investing in new stocks".The first and the one linked above is the period of time following the filing of the company's S-1 but before SEC staff declare the registration statement effective.During this time, issuers, company insiders, analysts, and other parties are legally restricted in their ability to discuss or promote the upcoming IPO (U.S. Securities and Exchange Commission, 2005).[29] During this time, insiders and any underwriters involved in the IPO are restricted from issuing any earnings forecasts or research reports for the company."Stag profit" is a situation in the stock market before and immediately after a company's initial public offering (or any new issue of shares).A "stag" is a party or individual who subscribes to the new issue expecting the price of the stock to rise immediately upon the start of trading.