Handbook of Corporate Finance Empirical Corporate Finance Volume 1

394 A. Ljungqvist of future deal flow increases the investor’s incentive to co-operate with the bank today. Since the authors ha ...

Ch. 7: IPO Underpricing 395 of bookbuilding. Positive price revisions presumably follow when informed investors reveal positive ...

396 A. Ljungqvist Spindt (1989)framework, since public information is freely available and so there is no need to compensate inv ...

Ch. 7: IPO Underpricing 397 transactions (Loughran and Ritter, 2002), an activity that Credit Suisse First Boston was fined $100 ...

398 A. Ljungqvist Biais, Bossaerts, and Rochet (2002)combine the agency cost setting ofBaron (1982) withBenveniste and Spindt’s ...

Ch. 7: IPO Underpricing 399 However, these 38 investment bank IPOs appear to have been underpriced by roughly as much as other I ...

400 A. Ljungqvist time period. Interestingly, however, in 1999 the point estimate falls to only 19 cents in trading commissions ...

Ch. 7: IPO Underpricing 401 quality of the board of directors, and in particular the choice of non-executive directors, who simi ...

402 A. Ljungqvist Usually, companies announcing seasoned equity offerings experience negative announcement-date returns. In the ...

Ch. 7: IPO Underpricing 403 companies floated in the U.S. between 1988 and 1995 subsequently were sued for vio- lations relating ...

404 A. Ljungqvist riod (1972–1977) were actually lower than between 1923 and 1930. Evidence based on the enactment of the 1933 S ...

Ch. 7: IPO Underpricing 405 to expect lagged index returns to affect lawsuits many years later. This makes lagged index returns ...

406 A. Ljungqvist price. Following a bookbuilding exercise, they could, for instance, overstate investor interest and price the ...

Ch. 7: IPO Underpricing 407 Michaely, and O’Hara (2000)show that the lead IPO underwriter always becomes the dominant market-mak ...

408 A. Ljungqvist This lends support to the view that price support is offered mainly for the benefit of institutional investors ...

Ch. 7: IPO Underpricing 409 make optimal operating and investment decisions. In particular, where the separation of ownership an ...

410 A. Ljungqvist hand, assume that the IPO is designed topreventa transfer of control in spite of the partial transfer of owner ...

Ch. 7: IPO Underpricing 411 response to large-scale buying. This will tend to make it unprofitable to assemble a large block of ...

412 A. Ljungqvist cated pro rata. Stoughton and Zechner, on the other hand, model a bookbuilding regime with discretionary alloc ...

Ch. 7: IPO Underpricing 413 their bids on the bids of earlier investors, rationally disregarding their own information. Successf ...