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| Postponement |
Postponement is an activity of pushing back the tentative calendar date of an offering of stock under certain conditions. Usually, the timing and listing of an offering depends on the approval of the stock exchange, which includes the firm’s achievement of the conditions determined and imposed by the board off trade.
If the conditions are not fulfilled and market conditions threaten the viability of the offering, the offering might be postponed. Apart from postponement, it is also possible that the deal is removed entirely in the case of market conditions leading to a point at which the deal is not viable.
Especially in the case of initial public offering (IPO), postponement occurs occasionally. An example of IPO postponement is the one of immuno-designed molecules (IDM). They announced the postponement 1 day before the IPO was planned.
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“Current market conditions” were stated as the reason. In the course of this postponement, investors feared effects on other IPOs, because IDM was one of the strongest firms in Europe, which planned to go public (Scrip, 2004).
An overview of theoretical models describing and explaining the situation of IPO postponement and the consequences with rational and semirational theories is provided by Ritter and Welch (2002), for instance.
