Abstract

http://ssrn.com/abstract=1018995
 


 



Industrial Diversification and Underpricing of Initial Public Offerings


Thomas Jason Boulton


Miami University

Scott Smart


Indiana University - Kelley School of Business - Department of Finance

Chad J. Zutter


University of Pittsburgh - Finance Group

October 3, 2007

Financial Management, Vol. 42, No. 3, 2013

Abstract:     
Diversified IPOs, firms reporting more than one business segment at the time of going public, experience less underpricing than do IPOs by focused issuers. We explore two explanations for this phenomenon. Diversification may benefit IPO firms by reducing information asymmetries and hence, lowering underpricing costs. Alternatively, higher quality focused firms may underprice their shares more to signal their quality to the market. Though we find at least some evidence consistent with each explanation, a majority of the evidence favors a signaling story.

Number of Pages in PDF File: 46

Keywords: Diversification, Initial Public Offerings, IPO Underpricing

JEL Classification: G24, G30, G32

Accepted Paper Series





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Date posted: October 3, 2007 ; Last revised: August 11, 2014

Suggested Citation

Boulton, Thomas Jason and Smart, Scott and Zutter, Chad J., Industrial Diversification and Underpricing of Initial Public Offerings (October 3, 2007). Financial Management, Vol. 42, No. 3, 2013. Available at SSRN: http://ssrn.com/abstract=1018995 or http://dx.doi.org/10.2139/ssrn.1018995

Contact Information

Thomas Jason Boulton (Contact Author)
Miami University ( email )
Oxford, OH 45056
United States
(513) 529-1563 (Phone)
(513) 529-8598 (Fax)
Scott B. Smart
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Kelley School of Business
Bloomington, IN 47405
United States
812-855-3401 (Phone)
812-855-5875 (Fax)

Chad J. Zutter
University of Pittsburgh - Finance Group ( email )
352 Mervis Hall, Katz GSOB
University of Pittsburgh
Pittsburgh, PA 15260
United States
412-648-2159 (Phone)
412-648-1693 (Fax)
HOME PAGE: http://www.pitt.edu/~czutter/
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