Allocation to Anchor Investors, Underpricing, and the After-market Performance of IPOs

Rama Seth, S. R. Vishwanatha, Durga Prasad

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

We study bidding by anchor investors in a two-stage initial public offering (IPO) process and document a negative, causal relation between allocation to anchor investors and underpricing. We find that anchor investors are likely to invest in hard-to-place offerings characterized by valuation uncertainty. We also document a positive relation between allocation to reputed anchor investors and returns up to lock-up expiration. Our evidence provides support for information revelation and targeting specific investors' theories of book building. Anchor-backed IPOs earn superior returns mainly due to monitoring. Who bids in an IPO seems to matter just as particular types of bids do.
OriginalsprogEngelsk
TidsskriftFinancial Management
Vol/bind48
Udgave nummer1
Sider (fra-til)159-186
Antal sider28
ISSN0046-3892
DOI
StatusUdgivet - 2019

Citer dette

Seth, Rama ; Vishwanatha, S. R. ; Prasad, Durga. / Allocation to Anchor Investors, Underpricing, and the After-market Performance of IPOs. I: Financial Management. 2019 ; Bind 48, Nr. 1. s. 159-186.
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Allocation to Anchor Investors, Underpricing, and the After-market Performance of IPOs. / Seth, Rama; Vishwanatha, S. R.; Prasad, Durga.

I: Financial Management, Bind 48, Nr. 1, 2019, s. 159-186.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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