Robust Determinants of IPO Underpricing and Their Implications for IPO Research

49 Pages Posted: 17 Mar 2009 Last revised: 13 May 2016

See all articles by Alexander W. Butler

Alexander W. Butler

Rice University - Jesse H. Jones Graduate School of Business

Michael O'Connor Keefe

Victoria University of Wellington

Robert L. Kieschnick

University of Texas at Dallas

Date Written: June 13, 2014

Abstract

Using several different methodologies, we quantify the statistical robustness of variables used in prior research to explain initial IPO returns. We establish a parsimonious list of robust variables and evaluate their implications for different theories of IPO underpricing and clustering. Further, we illustrate how using such a set of robust explanatory variables leads to several different conclusions than prior research that failed to include these important control variables. Researchers who identify new potential predictors of IPO initial returns should control for the list of robust variables we identify.

Keywords: IPO, initial returns, underpricing, underwriting, going public

JEL Classification: G12, G24, G30

Suggested Citation

Butler, Alexander W. and O'Connor Keefe, Michael and Kieschnick, Robert L., Robust Determinants of IPO Underpricing and Their Implications for IPO Research (June 13, 2014). Available at SSRN: https://ssrn.com/abstract=1361314 or http://dx.doi.org/10.2139/ssrn.1361314

Alexander W. Butler

Rice University - Jesse H. Jones Graduate School of Business ( email )

MS 531
Houston, TX 77005
United States
713-348-6341 (Phone)

HOME PAGE: http://www.owlnet.rice.edu/~awbutler/

Michael O'Connor Keefe

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Robert L. Kieschnick (Contact Author)

University of Texas at Dallas ( email )

800 W. Campbell Rd, SM31
Richardson, TX 75080
United States
972-883-6273 (Phone)

HOME PAGE: http://www.utdallas.edu/~rkiesch/

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