Underwriter Book-Building Methods, Investment Bank Reputation, and the Return Performance of Firms Conducting Initial Public Offerings
Posted: 15 Jan 1999
Date Written: December 1998
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: Suggested Citation