DETERMINANTS OF PRICE PREMIUMS - A STUDY OF INITIAL PUBLIC OFFERINGS IN THE MEDICAL DIAGNOSTICS AND DEVICES INDUSTRY

Based on IPOs in the medical diagnostics and devices industry, this st udy examined factors that influence the extent of price premium over b ook value in initial public offerings. Findings indicate that while th ere are positive relationships between IPO price premiums and the numb er of uses of proceeds specified in the prospectus, firm leverage and reduction of management ownership have negative influences on such pre miums. However; no association was found between the premium and under writer reputation or the company's stage of development. Implications of the findings and directions for future research are discussed.