With data from all the leading international investment banks on 220 IPOs raising $160bn, we test the determinants of IPO allocations. We compare investors' IPO allocations with proxies for their information production during the bookbuilding and the broking (and other) revenues those investors...

The signaling hypothesis suggests that firms have incentives to underprice their initial public offerings (IPOs) to signal their quality to the outside investors and to issue seasoned equity (SEO) at more favorable terms. While the initial empirical evidence on the signaling hypothesis was weak,...

We analyse a regulatory change in the Japanese IPO market that created an abrupt shift from hybrid price-discriminatory auctions to bookbuilding. We find that bookbuilding leads to significantly higher underpricing than hybrid price-discriminatory auctions. Further, we find evidence that price...

Clustering of IPO underwriting spreads at 7% poses two important puzzles: Is the market for U.S. equity underwriting services anti-competitive and why do equity underwriters invest in reputation-building? This study resolves both puzzles. Modeling endogeneity of firm-underwriter choice using a...

We analyze the determinants and consequences of option listing on IPO firm stock. We find that options are listed earlier on venture-backed and lower-reputation underwriter IPOs. We find a significant decrease in stock returns immediately after option listing, persisting for a year. Analyzing...

We investigate how information is incorporated into initial public offering (IPO) share prices. We find that greater uncertainty about the value of a firm's shares is associated with more prospectus disclosures concerning the firm's competitive environment and a more conservative anticipated...

This paper examines the role of multiple lead underwriters (MLUs) in pricing initial public offerings (IPOs) by considering certification and market power hypotheses. Consistent with the notion that MLUs provide certification to the issue, we find that IPOs backed by MLUs price the offer closer...

The first issue of shares is the key moment in the life cycle of any company that was not previously listed on a stock exchange. Considering the fact that transformation into a public open joint stock company brings along a number of advantages and challenges, it would be of great importance to...

Suppose IPO underpricing increases with underwriters' reputation. This study demonstrates higher underpricing is compatible with higher credibility of underwriting by reputable underwriters. Consistent with stated inference, increase in valuation uncertainty risk, and severity of adverse...

Is there quid pro quo in auctioned IPOs - an alternative to bookbuilding in U.S. and elsewhere? Using proprietary data on uniform-pricing IPO auctions from China, we show when the share allocation rule shifted from pro rata to lottery draw (that makes quid pro quo valuable to a bidder), fund...