Ranking Underwriters of European IPOs (original) (raw)
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Underwriter Reputation and Short-run IPO Returns: A Re-evaluation for an Emerging Market
SSRN Electronic Journal, 2004
This study examines the effect of underwriter reputation on the initial-day IPO returns in an emerging market. It uses both a traditional and an extended model given the characteristics of the IPO market under analysis. The results from the traditional model indicate that underwriter reputation does not affect the initial day IPO returns. However, after controlling for factors that are important in determining the price of an IPO in an emerging market, a complex relationship between underwriter reputation measures and IPO returns is documented. Results in this paper indicate that it is not appropriate to extend the findings in the US to other markets without taking into account the unique characteristics of these markets.
A Comparison of Underwriter Reputation Measurement Methods in Explaining Ipo Stock Performance
Akurasi : Jurnal Studi Akuntansi dan Keuangan, 2021
This study objective compares the underwriter reputation, measured by a different method, in explaining Initial Public Offering (IPO) performance. The reputation is measured based on underwriter IPO frequency and deal value. The underwriter's reputation is then ranked and categorized into quartiles. We use cross-section regression methods to test the effect of different underwriter reputation measurement methods on IPO performance. The dependent variable is short-term and long-term IPO performance. The independent variable is four underwriter reputation categories represented by three-level dummy variables. We found that only underwriter reputation measured by IPO frequency can explain IPO performance. The findings suggest IPO frequency help underwriter understand the market condition and value IPO more accurately. Firms that want to reduce the cost of IPO underpricing should choose underwriters with a higher IPO frequency.
Initial Performance of Greek IPOs, Underwriter's Reputation and Oversubscription
Managerial Finance, 33,5, 332-343., 2007
Abstract: This paper provides additional international evidence on the IPOs by examining the initial performance and two main determinants of short-run underpricing of 169 IPOs listed on the Athens Stock Exchange (ASE) over the period 1997-2002. The initial performance of the IPOs is measured by calculated two formulas: the raw returns and the excess or adjusted returns of the first, fifth and twenty first day respectively. Furthermore, we use a proxy to rank the underwriters' prestige along with the times of oversubscription, which are introduced as explanatory variables in our model. The results of the analysis provide evidence of significant underpricing. Furthermore, the cross sectional analysis on the determinants of the IPOs shows that both the underwriters' prestige and the times of oversubscription significantly affect the underpricing level of the IPOs over the most important and hot period for the Greek emerging stock market since its establishment, in terms of growth rates, acceleration of the going public process and volatility of market and stock returns.
Journal of Financial Intermediation, 1997
This paper investigates the empirical significance of underwriter reputation capital by analyzing the impact of initial returns of IPOs on lead-underwriter market value. Consistent with reputation costs, overpriced offerings are associated with a decrease in lead-underwriter market value significantly in excess of estimated direct costs. For moderately underpriced offerings, however, underwriter wealth effects are positive. Consistent with higher reputation costs, these wealth effects are insignificant when the IPO underpricing is more extreme. In jointly managed offerings, it is lead-underwriters that are primarily affected by IPO initial performance.
Insights into the Performance of Dutch IPOs
papers.ssrn.com
We estimate both initial underpricing and long-run stock performance for 138 Dutch IPOs that were listed during the period 1990-2009, making use of widely used BHAR and CAR and of alternative benchmarks (CAPM, FF3F, FF4F, Calendar time) over 36 months of secondary market performance. Findings align with international evidence and reveal long-term underperformance while they differentiate as this underperformance appears only few months after listing. Measuring these returns in calendar time, we find statistical significance with several of the benchmarks employed. Using buy and hold abnormal returns, we confirm the low underpricing level of Dutch IPOs. Cross-sectional regressions of short-and long-run performance disclose several significant factors. An underwriter's reputation and market (hot) condition prove to be significant in both short-and long-term cases. In contrast to many studies, we attribute long-run underperformance to IPOs listed during cold market periods. Results associated with pricing during the "hot IPO period" indicate better long-term (3-year) performance.
The Influence of Underwriter and Auditor Reputations on IPO Under-pricing
European Journal of Business and Management, 2013
Companies considering initiating public offerings (IPO) expect to raise funds and would like to maximize their initial return. The asymmetry of information between parties involved in initial public offerings often jeopardizes potential investors' involvement. Besides the financial factors, the reputations of the underwriters and auditors have a significant impact on the initial return of shares. This paper aims to investigate and measure the influence of underwriter and auditor reputation on under-pricing of share prices. The findings show that the higher the reputation, the lower is the initial return of shares, thus there is a higher level of undervaluation. The samples used are companies listed in the Indonesia Stock Exchange (IDX) during the period of 2004-2009. This study could contribute to academics', companies' and investors' knowledge about the impact of non-financial factors on share prices during initial public offerings.
We analyse a sample of 129 Initial Public Offerings (IPOs) on the Italian Stock Exchange from January 2001 to December 2012. Results confirm the presence of underpricing in two thirds of the sample offerings but with an average level of 6.75% that is far below previous studies. Moreover we provide detailed temporal insights to show that the phenomenon is timevarying, albeit our sample does not show a positive correlation with hot market periods only. The average stock performance 30 days after the listing is lower than average first day return, evidence that is mainly explained by temporary actions of price support by underwriters. Finally, through a series of multivariate regression analyses we find that various factors exercise an influence on the IPO underpricing level, specifically: firm size, aftermarket risk, market demand, financial crisis and shares retention by existing shareholders.
Underwriter Networks in Initial Public Offerings
SSRN Electronic Journal, 2014
Using various measures from Social Network Analysis (SNA), we analyze, for the first time in the literature, how various IPO characteristics are affected by the location of the lead IPO underwriter in the network of investment banks generated by its participation in various IPO underwriting syndicates. We hypothesize that investment banking networks perform two possible information-related roles during the IPO process: an information extraction role, where its investment banking network helps the lead underwriter extract credible information useful in pricing the IPO from various institutional investors; or an information dissemination role, where the lead underwriter is able to use its investment banking network to credibly convey its favorable private information about the IPO firm to various institutional investors. Based on these two roles, we develop testable hypotheses relating the location of the IPO underwriter in investment banking networks to the following IPO characteristics: IPO price revision during book-building; IPO and secondary market valuations; IPO initial returns; participation by financial market players such as financial analysts and institutional investors; and long-run post-IPO stock returns. Consistent with our hypotheses, our empirical findings show that more central lead IPO underwriters are associated with larger price revisions; greater IPO and after-market valuations; larger IPO initial returns; greater institutional investor equity holdings and analyst coverage immediately post-IPO; and greater long-run stock returns. Most of these findings are robust to controlling for the endogenous matching between underwriter centrality and IPO firm quality, and are also robust to controlling for various measures of lead underwriter reputation. Overall, our findings are consistent with a strong information dissemination role for investment banking networks in IPOs.