Evidence on the Strategic Allocation of Initial Public Offerings
Posted: 20 Dec 1998
The evidence reported in this paper suggests that institutional investors capture a large fraction of the short-run profits associated with IPOs. The favored status enjoyed by institutional investors in underpriced offerings appears, however, to carry a "quid pro quo" expectation that they will participate in less-attractive issues as well. This finding conforms with the notion that U.S. underwriters behave strategically in the allocation of IPOs.
JEL Classification: G12
Suggested Citation: Suggested Citation