Selection of a stock exchange for an IPO of a technology-based company

Abstract

The article examines factors influencing the choice of exchange platform used by the management of innovation-oriented companies, such as depth, accessibility, efficiency, and stability, as well as the level of underestimation of the shares of new issuers during an IPO. The authors formulate a series of hypotheses and show that the level of the depth of a site is directly dependent on the degree of development of the country's financial institutions for all types of sites (main and alternative), and on the level of trading intensity (but only for alternative ones). It was discovered that alternative sites of countries belonging to the Anglo-Saxon financial system are, on average, less concentrated than corresponding major exchange sectors. Regarding the underestimation of shares, it was shown that on the first day of trading, this is higher among Russian companies in the high-tech industry. A site selection algorithm is proposed that can be applied by managers of Russian innovation-oriented companies for making IPO decisions. This algorithm combines previously analyzed quantitative factors and a number of qualitative factors, which include the level of marketing and organizational support for new issuers, level of financial support for new issuers, and degree of company readiness to place shares on a specific site. The advantage is to take into account a wider set of factors that influence the decision to choose a site for an IPO of an innovation-oriented company and to consider opportunities offered by alternative stock exchanges for such issuers.