54 Pages Posted: 20 Mar 2007 Last revised: 10 Dec 2007
Date Written: December 6, 2007
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: 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