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Ipo Pricing and Allocation: a Survey of the Views of Institutional Investors

31 Pages Posted: 17 Mar 2006  

Tim Jenkinson

University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)

Howard Jones

University of Oxford, Saïd Business School

Multiple version iconThere are 2 versions of this paper

Date Written: January 2007

Abstract

Despite the central importance of investors to all IPO theories, relatively little is known about their role in practice. In this paper we survey institutional investors about how they assess IPOs, what information they provide to the investment banking syndicate, and the factors they believe influence allocations. Although the theoretical IPO literature has tended to focus on information revelation, the survey raises doubts as to the extent of incremental information production and whether bookrunners are, in practice, able to infer investors' valuations from their bids. We find that investor characteristics, in particular broking relationships with the bookrunner, are perceived to be the most important factors influencing allocations, which supports the view that IPO allocations are part of implicit quid pro quo deals with investment banks.

Keywords: IPO, institutional investors, survey

JEL Classification: G20, G23, G24

Suggested Citation

Jenkinson, Tim and Jones, Howard, Ipo Pricing and Allocation: a Survey of the Views of Institutional Investors (January 2007). AFA 2007 Chicago Meetings Paper. Available at SSRN: https://ssrn.com/abstract=891396 or http://dx.doi.org/10.2139/ssrn.891396

Tim Jenkinson (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
United Kingdom
+44 1865 288916 (Phone)
+44 1865 288831 (Fax)

HOME PAGE: http://www.sbs.oxford.edu/timjenkinson

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Howard Jones

University of Oxford, Saïd Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/research/people/Pages/HowardJones.aspx

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