Dual Class IPOs are Underpriced Less Severely
Chad J. Zutter
University of Pittsburgh - Finance Group
Indiana University - Kelley School of Business - Department of Finance
The Financial Review, Vol. 43, No. 1, December 2007
We analyze a sample of dual and single class IPOs to investigate whether empirical estimates of underpricing determinants are consistent across alternative measures of firm size and alternative techniques intended to account for underwriter price stabilization efforts. We find that results from long-standing methods for estimating underpricing relations are generally robust to one's choice of size proxy and are consistent with estimates obtained from censored regressions of first-day returns and from least squares regressions of longer horizon initial returns. We also confirm an existing finding in the literature that dual class IPOs endure less underpricing than do single class firms.
Keywords: Dual class, initial public offerings (IPOs), price stabilization, censored distribution, mixed distributions
JEL Classification: C13, C16, C34, G24, G34
Date posted: December 3, 2007
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