The Effects of IPO Marketing Breadth: Evidence From Weather-Induced Variation in Roadshow Prospectus Distribution

56 Pages Posted: 22 Apr 2021 Last revised: 21 Jul 2023

See all articles by Matthew Gustafson

Matthew Gustafson

Pennsylvania State University - Smeal College of Business

Joseph J. Henry

Northeastern University - D’Amore-McKim School of Business

Emily Kim

University of Kansas - School of Business

Kevin Pisciotta

University of Kansas - School of Business

Date Written: July 20, 2023

Abstract

Using the number of prospectuses underwriters distribute during the roadshow as a novel measure of IPO marketing breadth, we show that marketing breadth negatively relates to expected rationing risk and positively relates to issuer bargaining power. Two-stage least squares estimates exploiting weather-induced travel disruptions indicate that IPO marketing breadth increases price revisions and underpricing, with the benefits to marketing being roughly evenly split between issuers and initial investors. Underwriters benefit from higher fees, while issuers garner a variety of longer-run benefits: IPO marketing breadth reduces post-IPO information asymmetry, increases post-IPO investor awareness, and improves long-run stock performance.

Keywords: Initial Public Offerings; IPO Marketing Breadth; IPO Roadshows; Underwriter Information Dissemination; Weather Disruptions

JEL Classification: G20, G24, G30

Suggested Citation

Gustafson, Matthew and Henry, Joseph J. and Kim, Emily and Pisciotta, Kevin, The Effects of IPO Marketing Breadth: Evidence From Weather-Induced Variation in Roadshow Prospectus Distribution (July 20, 2023). Available at SSRN: https://ssrn.com/abstract=3830911 or http://dx.doi.org/10.2139/ssrn.3830911

Matthew Gustafson

Pennsylvania State University - Smeal College of Business ( email )

East Park Avenue
University Park, PA 16802
United States

Joseph J. Henry (Contact Author)

Northeastern University - D’Amore-McKim School of Business ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Emily Kim

University of Kansas - School of Business ( email )

Capitol Federal Hall
1654 Naismith Dr.
Lawrence, KS 66045
United States

Kevin Pisciotta

University of Kansas - School of Business ( email )

Capital Federal Hall
1654 Naismith Dr
Lawrence, KS 66045
United States

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