The Distribution of Information Among Institutional and Retail Investors and the Impact of Past Investment Performance on the Demand for IPOs

44 Pages Posted: 1 Feb 1997  

Matti Keloharju

Aalto University - School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Date Written: January 1997

Abstract

This study examines a unique Finnish database comprising 85,384 investors and 29 IPOs. The evidence indicates that on average institutional investors do not realize larger initial returns than retail investors, as the incentive to acquire information is limited by allocation rules which favor small orders. Within each investor category, however,large orders are associated with the best performance, suggesting that information differences figure more importantly within rather than between categories. A record of successful investment performance encourages an investor to continue using the same investment bank but has no reliable effect on order size in subsequent IPOs.

JEL Classification: G10

Suggested Citation

Keloharju, Matti, The Distribution of Information Among Institutional and Retail Investors and the Impact of Past Investment Performance on the Demand for IPOs (January 1997). Available at SSRN: https://ssrn.com/abstract=1126 or http://dx.doi.org/10.2139/ssrn.1126

Matti Keloharju (Contact Author)

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland
+358 40 353 8043 (Phone)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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