Multiple Bookrunners in IPOs
Wendy Yunchun Hu
University of Florida-Department of Finance, Insurance, and Real Estate
Jay R. Ritter
University of Florida - Department of Finance, Insurance and Real Estate
December 6, 2007
AFA 2008 New Orleans Meetings Paper
In the last decade, there has been a dramatic change in syndicate structure for Initial Public Offerings (IPOs), with the frequency of multiple bookrunners increasing from zero to over 50 percent. We posit that the primary benefit of multiple bookrunners to an issuer is improved bargaining power with regard to the offer price. This is reflected in a relatively high file price range and high offer price relative to the first-day closing market price. The increasing number of multiple bookrunners in the IPOs of recent years can be explained by (1) larger issue size, (2) the significantly reduced amount of available IPO business after 2000, (3) the decreased importance of all-star analyst coverage, and (4) the increased number of buyout-backed IPOs.
Number of Pages in PDF File: 54
Keywords: bookrunners, initial public offerings, underwriting syndicate
JEL Classification: G24, G12
Date posted: March 20, 2007 ; Last revised: December 10, 2007
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