Does the Par Value of Share Influence the Success of IPOS?

Abstract

This paper examines the impact of the par value concept on the success of new issues during initial public offering (IPO) and the subsequent efficiency of companies. The study is based on a sample of IPO firms which went public on the Warsaw Stock Exchange from 1998 to 2013. The paper shows that the concept of par value – which was invented to protect buyers and lenders against shares being issued without corresponding existing assets – interacts with investor behaviour and can be used to improve the success of a share issue. The paper also shows that this concept does not affect the profitability of companies after IPO.