The Breadth of IPO Marketing

62 Pages Posted: 22 Apr 2021 Last revised: 19 Jul 2022

See all articles by Matthew Gustafson

Matthew Gustafson

Pennsylvania State University - Smeal College of Business

Joseph J. Henry

Rowan University - Accounting & Finance

Emily Kim

University of Kansas - School of Business

Kevin Pisciotta

University of Kansas - School of Business

Date Written: June 24444, 2022

Abstract

We measure IPO marketing breadth using the number of prospectuses underwriters distribute during the roadshow. Marketing breadth is strongly related to the underwriter’s network size, but only weakly related to preexisting investor demand for information. Marketing breadth is lower when industry returns and issuer quality are high, suggesting underwriters market more when reputation risk and the marginal value of information are high. After accounting for underwriter networks and preexisting demand, marketing breadth positively predicts pre-IPO price revisions, post-IPO liquidity, and underpricing; just over half of the pricing benefits accrues to underwriters and their clients, and the rest accrues to issuers.

Keywords: Bookbuilding; IPO Marketing; Initial Public Offerings; Information Dissemination

JEL Classification: G20, G24, G30

Suggested Citation

Gustafson, Matthew and Henry, Joseph J. and Kim, Emily and Pisciotta, Kevin, The Breadth of IPO Marketing (June 24444, 2022). 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)

Rowan University - Accounting & Finance ( email )

Glassboro, NJ 08028
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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