Evidence of Information Spillovers in the Production of Investment Banking Services
Lawrence M. Benveniste
University of Minnesota - Twin Cities - Carlson School of Management
New 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)
Indiana University Bloomington - Department of Finance; China Academy of Financial Research (CAFR)
William J. Wilhelm
University of Virginia - McIntire School of Commerce
Journal of Finance, Forthcoming
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, G24Accepted Paper Series
Date posted: June 7, 2002
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