This paper studies the impact of affiliations between lead managers, venture capitalists, and institutional investors on the Initial Public Offering (IPO) pricing. Using a sample of 1,996 US IPOs issued between 1997 and 2010, we find that affiliations strongly and positively affect the offer price by improving the information production process. We also show that the underpricing is affected by affiliations because of conflicts of interest that exist between the players: when an institutional investor is affiliated with a lead manager or with a venture capitalist we observe nepotistic behavior in hot IPOs and dumping ground behavior in cold IPOs.
The effects of affiliations on the initial public offering pricing / Mazzoli, Camilla; Geranio, Manuela; Palmucci, Fabrizio. - In: INTERNATIONAL REVIEW OF ECONOMICS & FINANCE. - ISSN 1059-0560. - STAMPA. - 51:(2017), pp. 295-313. [10.1016/j.iref.2017.06.002]
The effects of affiliations on the initial public offering pricing
Mazzoli, Camilla;
2017-01-01
Abstract
This paper studies the impact of affiliations between lead managers, venture capitalists, and institutional investors on the Initial Public Offering (IPO) pricing. Using a sample of 1,996 US IPOs issued between 1997 and 2010, we find that affiliations strongly and positively affect the offer price by improving the information production process. We also show that the underpricing is affected by affiliations because of conflicts of interest that exist between the players: when an institutional investor is affiliated with a lead manager or with a venture capitalist we observe nepotistic behavior in hot IPOs and dumping ground behavior in cold IPOs.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
