Evidence Of Information Spillovers In The Production Of Investment Banking Services

By Lawrence M. Benveniste, Alexander P. Ljungqvist, William J. Wilhelm, Xiaoyun Yu. 2003

367 citations recorded by the source corpus.

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.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/b75accb8484a5892185af4872ddeb7972050f274

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Jay R. Ritter
2. Alexander P. Ljungqvist
3. Michelle René Lowry
4. William J. Wilhelm
5. F. Derrien
6. Ann E. Sherman
7. Oya Altinkiliç
8. Robert S. Hansen

In Finance

1. Jay R. Ritter
2. Michelle René Lowry
3. F. Derrien
4. Ann E. Sherman
5. Alexander P. Ljungqvist
6. Oya Altinkiliç
7. G. Schwert
8. William J. Wilhelm

Citations in the corpus

• Issuer surplus and the partial adjustment of IPO prices to public information (2005, positive): “Third, the frequency of IPOwithdrawal is inversely related to waiting-period market returns (Busaba et al., 2001; Benveniste et al., 2003 ).”
• IPO Pricing in “Hot” Market Conditions: Who Leaves Money on the Table? (2005, background): “Benveniste et al. (2003) confirm that initial returns, though higher when the overall IPO market is “hot,” are negatively correlated with the recent number of offerings in the same industry.”
• IPO Market Cycles: Bubbles or Sequential Learning? (2002, positive): “Consistent with this idea, Benveniste, Wilhelm, and Yu (1999) find that issuing firms structure their IPOs conditional on various features of recent offerings.”
• Does Prospect Theory Explain IPO Market Behavior (2005, background): “Related Work A substantial body of theory suggests that, other things equal, firms develop relationships with financial intermediaries as a means of preserving strategic advantage in product markets and conserving resources devoted to information production when issuers are privately informed about ”
• Global trends in IPO methods: Book building versus auctions with endogenous entry (2005, methodology): “For example, Biais and Faugeron-Crouzet (2002) show that the outcome of a dirty Dutch auction is equivalent to the Benveniste and Spindt (1989) book-building solution in this setting.”
• Do Initial Public Offering Firms Purchase Analyst Coverage with Underpricing (2004, background): “Ljungqvist and Wilhelm (2002) and Benveniste et al. (2003) model the revision as an endogenous variable.”