Underpricing and entrepreneurial wealth losses in IPOs: Theory and evidence

• 成果类型: Article
• 署名作者: Habib, MA; Ljungqvist, AP
• 署名单位: University of London; London Business School; New York University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/14.2.433
• 发表日期: 2001
• 页码: 433
• 关键词: initial public offerings; long-run performance; investment banking; underwriter; MARKET; certification; securities; reputation; PROCEEDS; COSTS

摘要

We model owners as solving a multidimensional problem when taking their firms public. Owners can affect the level of underpricing through the choices they make in promoting an issue, such as which underwriter to hire or on what exchange to list. The benefits of reducing underpricing in this way depend on the owners' participation in the offering and the magnitude of the dilution they suffer on retained shares, We argue that the extent to which owners trade off underpricing and promotion is determined by the minimization of their wealth losses. Evidence from a sample of U.S. initial public offering confirms our empirical predictions.