Evidence of Information Spillovers in the Production of Investment Banking Services

We provide evidence that firms attempting IPOs condition offer terms and the decision whether to carry through with an offering on the experience of their primary market contemporaries. Moreover, while initial returns and IPO volume are positively correlated in the aggregate, the correlation is nega...

Full description

Saved in:

Bibliographic Details
Published in:	The Journal of finance (New York) 2003-04, Vol.58 (2), p.577-608
Main Authors:	Benveniste, Lawrence M., Ljungqvist, Alexander, Wilhelm, William J., Yu, Xiaoyun
Format:	Article
Language:	eng
Subjects:	Bundling Business structures Capital costs Coefficients Industrial market Industry Information production Initial public offerings Investment banking Investors Mathematical models Statistical analysis Studies
Online Access:	Get full text
Tags:	Add Tag No Tags, Be the first to tag this record!

Description
Summary:	We provide evidence that firms attempting IPOs condition offer terms and the decision whether to carry through with an offering on the experience of their primary market contemporaries. Moreover, while initial returns and IPO volume are positively correlated in the aggregate, the correlation is negative among contemporaneous offerings subject to a common valuation factor. Our findings are consistent with investment banks implicitly bundling offerings subject to a common valuation factor to achieve more equitable internalization of information production costs and thereby preventing coordination failures in primary equity markets.
ISSN:	0022-1082 1540-6261