We examine the way investment banks allocate IPOs to their affiliated mutual funds worldwide. An underwriter may allocate hot IPOs to its affiliated funds to improve fund performance and increase asset management fees. Alternatively, a bank may allocate to its affiliated mutual funds...

The financial crisis provides a natural experiment to test theoretical predictions of post-IPO roles for equity underwriters. On the day of their underwriter's near failure, stock prices of clients of Bear Stearns, Lehman, Merrill and Wachovia fell by almost 5%, on average. This decline was more...

Sections 20 and 32 of the 1933 Glass-Steagall Act address a potential conflict of interest by banning commercial banks from the market for corporate securities underwriting. This restriction was officially rescinded in 1999 by the Gramm-Leach-Bliley Financial Modernization Act. In turn, this...

External networks are usually believed to add value to firms, but what happens when the connected parties have conflicting interests in a transaction? We study the impact of social connections between seasoned equity offering (SEO) issuers and their investment banks on the outcomes of the SEO....

Practitioners, regulators, and the financial media argue that underwriters tie Initial Public Offering (IPO) allocations to investor post-listing buying of the issuer shares in a process labelled price support. Arguably, this excess demand boosts post-listing returns which underwriters trade...

We examine the dependence of the performance effects of firms' network positions on the ages of the ties comprising them. Our analysis of Canadian investment banks' underwriting syndicate ties indicates that the performance benefits of closure increase with tie age, while benefits of bridging...

IPOs increasingly involve early investors who commit to buying shares before the offering is launched. Using a European sample, we examine whether banks underprice strongly-demanded IPOs to satisfy the limit prices of early investors, and whether such investors salvage weakly- demanded IPOs in...

We analyze the dual role of investment banks that provide advice to acquiring firms and act as underwriters on the securities issued to finance the acquisition. We find that a significant fraction (56 percent) of acquirers that issue public securities to finance their acquisitions also use their...

This paper presents a theory of inititial public offerings based on the idea that the optimal ownership structure of a company changes over the life cycle of the firm. Insiders take the company public when they have lost the comparative advantage over outsiders in gathering information to...

This paper investigates how underwriters set the IPO firm’s fair value, an ex-ante estimate of the market value, using a unique dataset of 228 reports from French underwriters. These reports are issued before the IPO shares start trading on the stock market and detail how underwriters...