On Investment Banker Monitoring in the New Issues Market

Posted: 18 Apr 2001

See all articles by Bharat A. Jain

Bharat A. Jain

Towson University

Omesh Kini

Georgia State University


This article primarily addresses two largely unanswered questions in the financial economics literature: (1) Is there a demand for lead bank monitoring in the IPO market? and (2) Does monitoring by lead investment banker lead to better post-issue performance? We find evidence consistent with the demand for underwriter monitoring in the IPO market. We examine variables which proxy for the incentives of lead underwriters to supply monitoring post-issue. These variables include lead investment bank reputation and whether warrants are issued to the underwriter by the issuing firm. We find that lead bank reputation is positively associated with the post-issue performance of IPO firms. We also examine whether additional valude added monitoring is provided by unaffiliated analysts. The number of unaffiliated analysts following is positively correlated with post-issue performance. Our results are consistent with thid party monitoring in the new issues market.

JEL Classification: G24, G34

Suggested Citation

Jain, Bharat A. and Kini, Omesh, On Investment Banker Monitoring in the New Issues Market. Available at SSRN: https://ssrn.com/abstract=172194

Bharat A. Jain (Contact Author)

Towson University ( email )

8000 York Road
Towson, MD 21252
United States
410-704-3542 (Phone)

Omesh Kini

Georgia State University ( email )

University Plaza
Atlanta, GA 30303-3083
United States
404-651-2656 (Phone)

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