Multiple Bookrunners in IPOs

54 Pages Posted: 20 Mar 2007 Last revised: 10 Dec 2007

Wendy Yunchun Hu

University of Florida-Department of Finance, Insurance, and Real Estate

Jay R. Ritter

University of Florida - Department of Finance, Insurance and Real Estate

Date Written: December 6, 2007

Abstract

In the last decade, there has been a dramatic change in syndicate structure for Initial Public Offerings (IPOs), with the frequency of multiple bookrunners increasing from zero to over 50 percent. We posit that the primary benefit of multiple bookrunners to an issuer is improved bargaining power with regard to the offer price. This is reflected in a relatively high file price range and high offer price relative to the first-day closing market price. The increasing number of multiple bookrunners in the IPOs of recent years can be explained by (1) larger issue size, (2) the significantly reduced amount of available IPO business after 2000, (3) the decreased importance of all-star analyst coverage, and (4) the increased number of buyout-backed IPOs.

Keywords: bookrunners, initial public offerings, underwriting syndicate

JEL Classification: G24, G12

Suggested Citation

Hu, Wendy Yunchun and Ritter, Jay R., Multiple Bookrunners in IPOs (December 6, 2007). AFA 2008 New Orleans Meetings Paper. Available at SSRN: https://ssrn.com/abstract=972628 or http://dx.doi.org/10.2139/ssrn.972628

Yunchun Hu

University of Florida-Department of Finance, Insurance, and Real Estate ( email )

Gainesville, FL 32611
United States
(352)392-5058 (Phone)
(352)392-0301 (Fax)

Jay R. Ritter (Contact Author)

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States
(352) 846-2837 (Phone)
(352) 392-0301 (Fax)

HOME PAGE: http://bear.cba.ufl.edu/ritter

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