REPLY SAMANTHA GREGG
Ka’iulani Kini K. Talbot
Liberty University Online
BUSI530-B07: Managerial Finance
Dr. Stephen Lacewell
September 11th, 2022
Author Note
Ka’iulani Kini K. Talbot
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to
Ka’iulani Kini K Talbot.
Email: kktalbot@liberty.edu
Reply to Samantha Gregg, Discussion Thread: Valuation Factors
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REPLY SAMANTHA GREGG
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Samantha, I enjoyed how you presented all points that affect the valuation of a company.
You gave a well-rounded argument for this discussion board. I want to expand on how some
factors can affect the IPO allocations to potential investors and how the firm’s reputation may
affect investors’ expectations.
There is not-so-known participation of investors during the book-building period.
Investors who participate in meetings before or during book building receive more generous
allocations on IPOs (Jenkinson, Jones, & Suntheim, 2018). Suppose an investor participates in a
meeting before the building period of books. In that case, it can also give the potential investor
an early gauge of the demand for IPOs, influencing the potential market value of a firm.
Although not illegal, this activity may bring some mistrust to future investors.
A firm reputation during a growth period or an acquisition can trigger positive investor
reactions as well as participation. On the other hand, investors may react negatively to an
acquisition of a firm with a strong growth reputation when acquiring a firm (Blagoeva, Kavusan,
& Jansen, 2020). Although this can be a strategic move to improve investors’ expectations about
a company’s positioning in their market, this may reflect a false present or past valuation of a
firm, and trust can be lost between investors and a firm.
Trust and transparency on how books are handled, and the accurate valuation of a firm
can act as a long-term relationship between investors and a firm. Mark 11:24 speaks about trust
“Therefore I say unto you, what things soever ye desire, when ye pray, believe that ye receive
them, and ye shall have them” (KJV, 2016). We must be always aware and use the book value
numbers before fully trusting the market value of a company as potential investors of a firm.
REPLY SAMANTHA GREGG
References
Blagoeva, R., Kavusan, K., & Jansen, J. (2020). Who violates expectations when? how
firms’ growth and dividend reputations affect investors’ reactions to acquisitions. Strategic
Management Journal, 41(9), 1712-1742. https://doi.org/10.1002/smj.3155
Jenkinson, T., Jones, H., & Suntheim, F. (2018). Quid pro quo? what factors influence
IPO allocations to investors? The Journal of Finance (New York), 73(5), 2303-2341.
https://doi.org/10.1111/jofi.12703
King James Version (2016). The holy bible. Christian Art Publishers
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