Download this Paper Open PDF in Browser

The Underwriter Persistence Phenomenon

51 Pages Posted: 25 Jan 2005  

Gerard Hoberg

University of Southern California - Marshall School of Business

Date Written: April 26, 2006


This study presents new evidence that initial IPO returns have persistent underwriter-specific components. These components cannot be explained by existing measures of underwriter quality, underwriter service, or controls for several known predictors of initial IPO returns. Tests that trace the roots of persistence most broadly support theories of asymmetric information among underwriters. I present such a model, and consistent with its predictions, I find that high underpricing underwriters (1) are responsible for a majority of the partial adjustment phenomenon, (2) make more informed analyst revisions, (3) experience superior market share growth, and (4) are more likely to serve institutional clientele.

Keywords: Initial Public Offers, IPOs, corporate finance, underwriters, initial returns, underpricing

JEL Classification: G24

Suggested Citation

Hoberg, Gerard, The Underwriter Persistence Phenomenon (April 26, 2006). Available at SSRN: or

Gerard Hoberg (Contact Author)

University of Southern California - Marshall School of Business ( email )

Marshall School of Business
Los Angeles, CA 90089
United States


Paper statistics

Abstract Views