Graduation Year

Spring 2013

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

Ananda Ganguly

Rights Information

© 2013 Cheryl Yu

Abstract

Having received much recent media publicity in light of the controversies surrounding Facebook's NASDAQ debut, the subject matter of IPO valuation has long been a popular target for academic research. Existing literature on this subject covers areas from IPO strategy to deliberate underpricing, information asymmetry, and pricing decisions. Of little mention, however, is the viability of actual fundamental financial statements in formulating firm valuations. This study makes use of the residual income valuation model to designate fundamental valuations to 54 firms in the United States information technology services sector in effort to shed light on the relationship between a firm's fundamental valuation and its actual market valuation at time of offering. Also taken into consideration are existing acquisition bids for each of the firms so as to determine whether there exists a correlation between the size of deviation between fundamental and market valuations and buyout type.

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This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

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