The Pricing of Underwriting Services in the Australian Capital Market

37 Pages Posted: 31 Jul 2000

See all articles by Julian Yeo

Julian Yeo

Columbia University - Accounting

Janice C. Y. How

Queensland University of Technology; Financial Research Network (FIRN)

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Recent media releases have placed enormous strains on the credibility of the underwriting industry. It has been alleged that underwriters in the US and UK collude and fix underwriting fees. In contrast to recent evidence on the underwriting spread in the US (Chen and Ritter, 2000), we find that the Australian underwriting fee is not clustered at one particular percentage. Using 282 underwritten industrial IPOs from 1980 to 1996, our results show that underwriters systematically price their services according to firm-specific variables such as the offer size, the subscription period of the issue, the retained ownership after the IPO, the offer price, and whether underwriters receive options as part of their compensation.

JEL Classification: G12

Suggested Citation

Yeo, Julian and How, Janice C. Y., The Pricing of Underwriting Services in the Australian Capital Market. Available at SSRN: or

Julian Yeo

Columbia University - Accounting ( email )

3022 Broadway
New York, NY 10027
United States

Janice C. Y. How (Contact Author)

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane


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