This chapter analyzes the securities issuance process, focusing on initial public offerings (IPOs) and seasoned equity offerings (SEOs). The IPO literature documents three empirical patterns: 1) short-run underpricing; 2) long-run underperformance (although this is contentious); and 3) extreme...

We examine whether underwriters price-up weakly-demanded IPOs to prevent withdrawal. Our empirical strategy exploits a discontinuity in the distribution of IPO prices around the low boundary of the filing range. Offerings with a high ex-ante withdrawal probability that are priced at this...

This research investigates how banks expand after entering the underwriting market by examining the relationship between commercial bank equity investments and underwriting fees. First, we find that not only bank underwriters with private information about issuers, but also those without private...

We explore the role of placement agents in equity private placements. Reputable agents are more likely to place shares of firms that have performed better and that have had frequent prior relationships with the agent. Controlling for self-selection and endogeneity, firms using reputable agents...

We examine investment banks' strategic entry and market share gain in the new China H-share IPO (HIPO) market since 1993. Investment banks would have the incentive in initial years to obtain the HIPO business by low balling, i.e., providing high offer prices to the issuer, leading to a lower...

The financial crisis provides a natural experiment for testing theoretical predictions of the equity underwriter’s role following an initial public offering. Clients of Bear Stearns, Lehman Brothers, Merrill Lynch, and Wachovia saw their stock prices fall almost 5 percent, on average, on the...

We study the role of banking relationships in IPO underwriting. Among other issues, we consider whether banking relationships lead to increased access to public equity markets, especially for smaller, lesserknown firms. When a firm in Japan goes public, it can engage an investment bank that is...

Using a sample of 779 Japanese IPOs over the 2002-2012 period, we find a strong retail orientation in new share allocation. As for institutional allocation, the most complete universal banking form of underwriting neither advantages nor disadvantages investors in affiliated mutual funds, both...

One explanation provided for the relatively high and increasingly stable spreads for moderate - sized IPOs ($20-$80 million) documented in Chen and Ritter (2000) is that issuing firms focus less on price and more on a combination of investment bank-differentiating factors (such as underwriter...