276 B.E. Eckbo et al.
Ta b l e 8
Evidence on underpricing in IPOs and SEOsStudy Sample period Explanatory variable Sign
A. IPO studies
Megginson and Weiss (1991) 1983–1987 Venture capital backing −
Underwriter rank (market share) −
Firm age −
Booth and Chua (1996) 1977–1988 Log(offer price) +
Underwriter rank∗firm commitment −
Log(offer price)∗best effort −
Prior IPO activity (past 3 month) −
Prior IPO activity∗best efforts −
Industry IPOs (12 month)∗best effort −
Beatty and Welch (1996) 1992–1994 Underwriter compensation (%) +
Log(1+listed risks) +
Underwriter rank (market share) +
Inverse of offer price −
Auditor market share (residual ) −
Lawyer compensation (residual) −
Carter, Dark, and Singh (1998) 1979–1991 Secondary offering (%) +
Stock return standard deviation +
Log(offer size) −
Log(1+firm age) −
Underwriter rank (Carter–Manaster) −
Gompers and Lerner (1999) 1972–1992 Log(equity capitalization) +
Filing midpoint−offer price (%) +
Log(book to market) −
Underwriter rank −
Underwriter and venture investor −
Lowry and Shu (2002) 1988–1995 Lawsuit likelihood estimate +
Market capitalization +
Technology firm +
Offer price−filing midpoint (%) +
Cum. market return (prior 15 days) +
Underwriter rank −
Venture backed −
NYSE/Amex listed −
Lowry and Schwert (2002) 1985–1997 Technology firm +
Filing midpoint−offer price +
Filing midpoint−offer price> 0 +
Underwriter rank −
Log(real total assets) −
National market system listed −
Amex listed −
Hansen (2001) 1980–1999 Underwriter rank +
Stock return standard deviation +
Secondary offering proportion +
(Continued on next page)