Individual Bankers, Concurrent IPO Underwriting, and Information Spillover 

Abstract

Using manually collected data on individual investment bankers involved in U.S. initial public offerings (IPOs), we find that IPOs experience significantly lower underpricing when their lead banker simultaneously underwrites other IPOs within the same industry. In contrast, there is no evidence of information spillovers from same-industry IPOs concurrently managed by different bankers, even at the same bank. IPOs concurrently underwritten by the same banker also have smaller offer price revisions during bookbuilding. We find evidence of shared information production costs among issuers within a banker’s portfolio. Overall, our findings demonstrate that individual bankers possess proprietary information and client relationships, making them key conduits for information spillovers in the IPO market. The concentration of franchise value in individuals also highlights a potential human capital risk that investment banks must manage.

Keywords: IPO, Underpricing, Information Spillover, Organizational Economics JEL Classification: G24, G14, D82, J24