The Distribution of Information Among Institutional and Retail Investors in Ipos
Posted: 5 Apr 2002
This study examines investor performance in Finnish IPOs using a unique database comprising 85,384 investors and 29 offerings. The evidence indicates that on average institutional investors do not realize larger initial returns than retail investors, as the incentive to acquire information is limited by allocation rules which favour small orders. This result is in contrast to findings by Aggarwal et al. (2001), who show that institutional investors perform better in a bookbuilding environment. Within each investor category, however, large orders are associated with the best performance, suggesting that information differences figure more importantly within rather than between categories.
Keywords: IPOs, investment performance, institutional investors, retail investors
JEL Classification: G32, G14
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