What is Special About the Roles of Underwriter Reputation and Market Activities in Initial Public Offerings?

Posted: 22 Nov 2003

See all articles by Dennis E. Logue

Dennis E. Logue

The Brattle Group

Richard J. Rogalski

Dartmouth College - Tuck School of Business

James K. Seward

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

Lynn Foster-Johnson

Dartmouth College - Tuck School of Business

Abstract

This article examines the interaction between underwriter reputation and market activities during the initial public offering (IPO) process. Underwriter reputation is a significant determinant of premarket underwriter activities, weakly related to aftermarket price stabilization activities, and unrelated to issuer returns. Premarket underwriter activities are a significant determinant of issue-date returns and aftermarket underwriter activities, but are unrelated to longer-run returns. Aftermarket underwriter activities are significantly related to longer-run returns. The results suggest that simultaneous consideration of underwriter reputation and market activities is important if proper inferences about the IPO process and investor returns are to be drawn.

Suggested Citation

Logue, Dennis E. and Rogalski, Richard J. and Seward, James K. and Foster-Johnson, Lynn, What is Special About the Roles of Underwriter Reputation and Market Activities in Initial Public Offerings?. Available at SSRN: https://ssrn.com/abstract=305708

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

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)

Lynn Foster-Johnson

Dartmouth College - Tuck School of Business ( email )

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

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