The Role of IPO Underwriting Syndicates: Pricing, Information Production, and Underwriter Competition

49 Pages Posted: 7 May 2003

See all articles by Shane A. Corwin

Shane A. Corwin

University of Notre Dame - Mendoza College of Business

Paul H. Schultz

University of Notre Dame - Department of Finance

Date Written: March 2003

Abstract

We examine syndicates for 1,638 IPOs from January 1997 through June 2002. We find strong evidence of information production by syndicate members. Offer prices are more likely to be revised in response to information when the syndicate has more underwriters and especially more co-managers. More co-managers also results in more analyst coverage and additional market makers following the IPO. Relationships between underwriters are critical in determining the composition of syndicates, perhaps because they mitigate free-riding and moral hazard problems. While there appear to be benefits to larger syndicates, we discuss several factors that may limit syndicate size.

Keywords: Initial Public Offering, Syndicates, Underpricing, Information Production

JEL Classification: G14, G32

Suggested Citation

Corwin, Shane A. and Schultz, Paul H., The Role of IPO Underwriting Syndicates: Pricing, Information Production, and Underwriter Competition (March 2003). Available at SSRN: https://ssrn.com/abstract=389723 or http://dx.doi.org/10.2139/ssrn.389723

Shane A. Corwin (Contact Author)

University of Notre Dame - Mendoza College of Business ( email )

240 Mendoza College of Business
Notre Dame, IN 46556-0399
United States

Paul H. Schultz

University of Notre Dame - Department of Finance ( email )

P.O. Box 399
Notre Dame, IN 46556-0399
United States
219-631-3338 (Phone)
219-631-5255 (Fax)

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