Ipo Pricing and Allocation: a Survey of the Views of Institutional Investors
University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); University of Oxford - Said Business School
University of Oxford, Saïd Business School
AFA 2007 Chicago Meetings Paper
Despite the central importance of investors to all IPO theories, relatively little is known about their role in practice. In this paper we survey institutional investors about how they assess IPOs, what information they provide to the investment banking syndicate, and the factors they believe influence allocations. Although the theoretical IPO literature has tended to focus on information revelation, the survey raises doubts as to the extent of incremental information production and whether bookrunners are, in practice, able to infer investors' valuations from their bids. We find that investor characteristics, in particular broking relationships with the bookrunner, are perceived to be the most important factors influencing allocations, which supports the view that IPO allocations are part of implicit quid pro quo deals with investment banks.
Number of Pages in PDF File: 31
Keywords: IPO, institutional investors, survey
JEL Classification: G20, G23, G24
Date posted: March 17, 2006
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