Local underwriter oligopolies and IPO underpricing

• 成果类型: Article
• 署名作者: Liu, Xiaoding; Ritter, Jay R.
• 署名单位: State University System of Florida; University of Florida
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2011.01.009
• 发表日期: 2011
• 页码: 579-601
• 关键词: IPOs; Underwriters; oligopoly; venture capital; analysts

摘要

We develop a theory of initial public offering (IPO) underpricing based on differentiated underwriting services and localized competition. Even though a large number of investment banks compete for IPOs, if issuers care about non-price dimensions of underwriting, then the industry structure is best characterized as a series of local oligopolies. We test our model implications on all-star analyst coverage, industry expertise, and other non-price dimensions. Furthermore, we posit that venture capitalists (VCs) are especially focused on all-star analyst coverage, and develop the analyst lust theory of the underpricing of VC-backed IPOs. Consistent with this theory, we find that VC-backed IPOs are much more underpriced when they have coverage from an all-star analyst. (C) 2011 Published by Elsevier B.V.