IPOs, clustering, indirect learning and filing independently

Hugh M.J. Colaco; Chinmoy Ghosh; John Knopf; John Teall

doi:10.1016/j.jbankfin.2009.03.016

IPOs, clustering, indirect learning and filing independently

Hugh M.J. Colaco, Chinmoy Ghosh, John Knopf, John Teall

Research output: Contribution to journal › Article › peer-review

Abstract

IPO underpricing has been attributed to valuation uncertainty, which can be at least partially resolved by the indirect learning associated with IPO clustering [Benveniste, L.M., Ljungqvist, A., Wilhelm, W.J., Yu, X.Y., 2003. Evidence of information spillovers in the production of investment banking services. Journal of Finance 58, 577–608]. We examine why firms might choose not to issue their IPOs contemporaneously with clusters of similar firms, forgoing opportunities to learn from their peers. We find that the willingness to file an IPO without the benefit of indirect learning from peer firm IPOs is directly related to insiders’ needs for portfolio diversification and the firm’s need to raise capital.

Original language	English
Pages (from-to)	2070-2079
Number of pages	10
Journal	Journal of Banking and Finance
Volume	33
Issue number	11
Early online date	13 Jun 2009
DOIs	https://doi.org/10.1016/j.jbankfin.2009.03.016
Publication status	Published - Nov 2009

Keywords

IPO
underpricing
underwriter
learning

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10.1016/j.jbankfin.2009.03.016

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title = "IPOs, clustering, indirect learning and filing independently",

abstract = "IPO underpricing has been attributed to valuation uncertainty, which can be at least partially resolved by the indirect learning associated with IPO clustering [Benveniste, L.M., Ljungqvist, A., Wilhelm, W.J., Yu, X.Y., 2003. Evidence of information spillovers in the production of investment banking services. Journal of Finance 58, 577–608]. We examine why firms might choose not to issue their IPOs contemporaneously with clusters of similar firms, forgoing opportunities to learn from their peers. We find that the willingness to file an IPO without the benefit of indirect learning from peer firm IPOs is directly related to insiders{\textquoteright} needs for portfolio diversification and the firm{\textquoteright}s need to raise capital.",

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AU - Teall, John

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AB - IPO underpricing has been attributed to valuation uncertainty, which can be at least partially resolved by the indirect learning associated with IPO clustering [Benveniste, L.M., Ljungqvist, A., Wilhelm, W.J., Yu, X.Y., 2003. Evidence of information spillovers in the production of investment banking services. Journal of Finance 58, 577–608]. We examine why firms might choose not to issue their IPOs contemporaneously with clusters of similar firms, forgoing opportunities to learn from their peers. We find that the willingness to file an IPO without the benefit of indirect learning from peer firm IPOs is directly related to insiders’ needs for portfolio diversification and the firm’s need to raise capital.

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IPOs, clustering, indirect learning and filing independently

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Keywords

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