To say that the financial industry has been doing well in recent years would be to understate its successes. With seven initial public offerings (IPOs) over $1 billion, the financial industry increased IPO proceeds by 82% over 2013. Then, the following year, an astounding 275 IPOs were completed, topping 2013’s total of 222 by more than 23%, and shattering its high-water mark of $55 billion with a whopping $85 billion in proceeds.
With each year getting better and better, 2015 is well-positioned to be a great year for public and private placement offerings. That is, if companies’ CEOs make the right impression, according to a new study.
The Wall Street Journal reports that three professors — Standford University’s Elizabeth Blankenspoor, the University of North Carolina at Chapel Hill’s Bradley Hendricks, and the University of Michigan’s Gregory Miller — worked together to quantify the reactions of 900 random people who watched 224 CEOS make their pitches.
What they found was that the public’s perception of a CEO’s competence, trustworthiness, and attractiveness during his or her presentation could directly influence the price of an IPO.
Each participant watched a 30-second clip of CEO presentations that obscured what the person was saying, which was done to ensure that the CEOs’ pitches wouldn’t sway participants. Researchers then asked them to rate the CEOs solely on the criteria of attractiveness, competence and trustworthiness, and found that there was a 5% higher rating on these perceptions correlated to an increase of 11% in IPO price beyond the price that would have been predicted on fundamentals alone.
In other words, the CEOs who were rated as being more attractive, competent, and trustworthy also had higher IPO prices.
Of course, presentation is only part of a successful IPO. It also takes the help of corporate securities law firms‘ IPO attorneys to make sure everything is in order, even if only private placement securities are being offered.
If you have any questions about making a good presentation or how securities law firms can help you get things in order, feel free to share in the comments.