Underwriter Book-Building Methods, Investment Bank Reputation, and the Return Performance of Firms Conducting Initial Public Offerings

Posted: 15 Jan 1999

See all articles by James K. Seward

James K. Seward

University of Wisconsin - Madison - Department of Finance, Investment and Banking

Dennis E. Logue

The Brattle Group

Richard J. Rogalski

Dartmouth College - Tuck School of Business

Lynn Foster-Johnson

Dartmouth College - Tuck School of Business

Date Written: December 1998

Abstract

We use an empirical methodology known as path analysis to study the interrelationships in the premarket, issue date, and aftermarket underwriting activities of investment banks, as well as the impact of such activities on short-run and long-run investor returns in initial public offerings (IPOs). We also investigate the impact of investment bank reputation measures on the underwriting process and investor returns over short-run and long-run horizons. Overall, the results confirm that premarket, issue date, and aftermarket underwriter activities are significantly related. These activities are intended to mitigate the influence of private information available to investors about the true value of new issues.

JEL Classification: G12, G14, G31, G32

Suggested Citation

Seward, James K. and Logue, Dennis E. and Rogalski, Richard J. and Foster-Johnson, Lynn, Underwriter Book-Building Methods, Investment Bank Reputation, and the Return Performance of Firms Conducting Initial Public Offerings (December 1998). Available at SSRN: https://ssrn.com/abstract=143050

James K. Seward (Contact Author)

University of Wisconsin - Madison - Department of Finance, Investment and Banking ( email )

975 University Avenue
Madison, WI 53706
United States
608-263-2738 (Phone)
608-265-4195 (Fax)

Dennis E. Logue

The Brattle Group ( email )

44 Brattle Street
3rd Floor
Cambridge, MA 02138-3736
United States
617.864.7900 (Phone)

Richard J. Rogalski

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Lynn Foster-Johnson

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States
603-646-1945 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
2,154
PlumX Metrics