Journal article
The Information Advantage of Underwriters in IPOs
Management science, v 65(12), pp 5721-5740
01 Dec 2019
Abstract
Using a unique data set of dealer-level trading data in bookbuilding initial public offerings (IPOs), we find strong evidence that lead underwriter trades in IPO firms are significantly related to subsequent IPO abnormal returns. This relation is concentrated among issues in which underwriters' information advantage is likely greater, specifically among IPOs with higher information asymmetry or subject to higher investor sentiment and among underwriters with the most industry experience. In contrast, we find no similar relation for trades by other syndicate members, who are not involved in due diligence or pricing, or around auction IPOs, which are characterized by less underwriter involvement. Our results are consistent with the joint hypothesis that underwriters of bookbuilding IPOs gain unique insight into the values of these client firms and that they trade on this information advantage.
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Details
- Title
- The Information Advantage of Underwriters in IPOs
- Creators
- Yao-Min Chiang - National Taiwan UniversityMichelle Lowry - Drexel UniversityYiming Qian - University of Iowa
- Publication Details
- Management science, v 65(12), pp 5721-5740
- Publisher
- Informs
- Number of pages
- 20
- Grant note
- 102-2410-H-002-225-MY3 / Ministry of Science and Technology, Taiwan
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000500924400014
- Scopus ID
- 2-s2.0-85075996776
- Other Identifier
- 991019167942204721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Management
- Operations Research & Management Science