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Evidence of Information Spillovers in the Production of Investment Banking ServicesLawrence M. BenvenisteUniversity of Minnesota - Twin Cities - Carlson School of Management Alexander LjungqvistNew York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN) Xiaoyun YuIndiana University Bloomington - Department of Finance; China Academy of Financial Research (CAFR) William J. WilhelmUniversity of Virginia - McIntire School of Commerce Journal of Finance, Forthcoming Abstract: We provide evidence that firms attempting IPOs condition offer terms and the decision whether to carry through with an offering on the experience of their primary market contemporaries. Moreover, while initial returns and IPO volume are positively correlated in the aggregate, the correlation is negative among contemporaneous offerings subject to a common valuation factor. Our findings are consistent with investment banks implicitly bundling offerings subject to a common valuation factor to achieve more equitable internalization of information production costs and thereby preventing coordination failures in primary equity markets.
Keywords: spiders, index funds, mutual funds, performance JEL Classification: G32, G24 Accepted Paper SeriesDate posted: June 7, 2002Suggested CitationContact Information
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