IPO Quantity Revisions

During IPO bookbuilding, issuers revise both the offer price and the number of shares (or equivalently, insider retention). These two percentage revisions are of comparable magnitude and are nearly uncorrelated. We show theoretically that revision to offer price and to retention capture information differently: offer prices increase with good news of any kind, whereas retention rises with good news about assets-in-place but declines with good news about growth options. Consistent with the model, retention is positively associated with the return of the Fama-French value portfolio and negatively with that of the growth portfolio during the bookbuilding period. Post-IPO abnormal capital expenditures are positively associated with price revision when retention revision is downward, but not when it is upward. These findings indicate that price and retention revisions can disentangle the nature of information received during the IPO process