Institutional Allocation in Initial Public Offerings: Empirical Evidence

Journal of Finance - Tập 57 Số 3 - Trang 1421-1442 - 2002
Reena Aggarwal1,2,3, Nagpurnanand Prabhala1,2,3, Manju Puri1,2,3
1College Park, MD 20742 Stanford, CA 94505
2NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138
3School of Business Smith School of Business Stanford University Georgetown University University of Maryland Graduate School of Business Washington, DC 20057 4427 Van Munching Hall 518 Memorial Way

Tóm tắt

ABSTRACTWe analyze institutional allocation in initial public offerings (IPOs) using a new data set of U.S. offerings between 1997 and 1998. We document a positive relationship between institutional allocation and day one IPO returns. This is partly explained by the practice of giving institutions more shares in IPOs with strong premarket demand, consistent with book‐building theories. However, institutional allocation also contains private information about first‐day IPO returns not reflected in premarket demand and other public information. Our evidence supports book‐building theories of IPO underpricing, but suggests that institutional allocation in underpriced issues is in excess of that explained by book‐building alone.

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Tài liệu tham khảo

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Thông tin xuất bản

Journal of Finance

Tập 57 Số 3

1421-1442

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