Loading…

Why are IPO investors net buyers through lead underwriters?

In Nasdaq initial public offerings (IPOs) issued between 1997 and 2002, purchases of lead underwriter clients exceed sales by an amount equal to 8.79% of the total issue. We find that lead underwriter clients do not buy to build larger long-term positions, capitalize on superior execution quality, o...

Full description

Saved in:

Bibliographic Details
Published in:	Journal of financial economics 2007-08, Vol.85 (2), p.518-551
Main Authors:	Griffin, John M., Harris, Jeffrey H., Topaloglu, Selim
Format:	Article
Language:	English
Subjects:	Financial risks Information economics Initial public offering Initial public offerings Investment banks Investors IPO Laddering Lead underwriter NASDAQ trading Ownership and control Risk management Stockbrokers Studies Syndicate Underwriting Venture capital
Citations:	Items that this one cites Items that cite this one
Online Access:	Get full text
Tags:	Add Tag No Tags, Be the first to tag this record!

cited_by	cdi_FETCH-LOGICAL-c543t-50c7e4d483afc1c24ca9a659d186b76c58abcd933becb1536fb8f19d50817a3e3
cites	cdi_FETCH-LOGICAL-c543t-50c7e4d483afc1c24ca9a659d186b76c58abcd933becb1536fb8f19d50817a3e3
container_end_page	551
container_issue	2
container_start_page	518
container_title	Journal of financial economics
container_volume	85
creator	Griffin, John M. Harris, Jeffrey H. Topaloglu, Selim
description	In Nasdaq initial public offerings (IPOs) issued between 1997 and 2002, purchases of lead underwriter clients exceed sales by an amount equal to 8.79% of the total issue. We find that lead underwriter clients do not buy to build larger long-term positions, capitalize on superior execution quality, or because of clientele effects. However, characteristics of net buying that are at odds with these explanations and other behaviors (like institutional purchases of cold IPOs) are all consistent with lead underwriters engaging in quid pro quo arrangements with clients. Price contribution analysis shows that such client buying activity contributes significantly to first-day price increases.
doi_str_mv	10.1016/j.jfineco.2005.12.005
format	article
fullrecord	<record><control><sourceid>proquest_cross</sourceid><recordid>TN_cdi_proquest_miscellaneous_36692686</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><els_id>S0304405X06001474</els_id><sourcerecordid>36692686</sourcerecordid><originalsourceid>FETCH-LOGICAL-c543t-50c7e4d483afc1c24ca9a659d186b76c58abcd933becb1536fb8f19d50817a3e3</originalsourceid><addsrcrecordid>eNqFUE1r3DAUFKWFbrf9CQWTQ292JMuSZXIIIeSTwPaQ0N4esvzcldm1N5K9Yf993-Klh1wqGM2DNzM8hrHvgmeCC33eZV3re3RDlnOuMpFnRB_YQpiySvOyLD6yBZe8SAuufn9mX2LsOL1SVQt28Wt9SGzA5OHnKvH9HuM4hJj0OCb1dEAax3UYpj_rZIO2Saa-wfAW_Eiby6_sU2s3Eb-deMlebm-er-_Tp9Xdw_XVU-pUIcdUcVdi0RRG2tYJlxfOVlarqhFG16V2ytjaNZWUNbpaKKnb2rSiahQ3orQS5ZL9mHN3YXid6ELY-uhws7E9DlMEqXWVa6NJePZO2A1T6Ok2yKXQFReSk0jNIheGGAO2sAt-a8MBBIdjn9DBqU849gkiByLyPc6-gDt0_0yIOKthD9IaRd-BQM6SyB9Hwo6ghAGlBKzHLYVdzmFIve09BojOY--w8QHdCM3g_3POX6JKmao</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>231690130</pqid></control><display><type>article</type><title>Why are IPO investors net buyers through lead underwriters?</title><source>International Bibliography of the Social Sciences (IBSS)</source><source>ScienceDirect Freedom Collection</source><creator>Griffin, John M. ; Harris, Jeffrey H. ; Topaloglu, Selim</creator><creatorcontrib>Griffin, John M. ; Harris, Jeffrey H. ; Topaloglu, Selim</creatorcontrib><description>In Nasdaq initial public offerings (IPOs) issued between 1997 and 2002, purchases of lead underwriter clients exceed sales by an amount equal to 8.79% of the total issue. We find that lead underwriter clients do not buy to build larger long-term positions, capitalize on superior execution quality, or because of clientele effects. However, characteristics of net buying that are at odds with these explanations and other behaviors (like institutional purchases of cold IPOs) are all consistent with lead underwriters engaging in quid pro quo arrangements with clients. Price contribution analysis shows that such client buying activity contributes significantly to first-day price increases.</description><identifier>ISSN: 0304-405X</identifier><identifier>EISSN: 1879-2774</identifier><identifier>DOI: 10.1016/j.jfineco.2005.12.005</identifier><identifier>CODEN: JFECDT</identifier><language>eng</language><publisher>Amsterdam: Elsevier B.V</publisher><subject>Financial risks ; Information economics ; Initial public offering ; Initial public offerings ; Investment banks ; Investors ; IPO ; Laddering ; Lead underwriter ; NASDAQ trading ; Ownership and control ; Risk management ; Stockbrokers ; Studies ; Syndicate ; Underwriting ; Venture capital</subject><ispartof>Journal of financial economics, 2007-08, Vol.85 (2), p.518-551</ispartof><rights>2006 Elsevier B.V.</rights><rights>Copyright Elsevier Sequoia S.A. Aug 2007</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c543t-50c7e4d483afc1c24ca9a659d186b76c58abcd933becb1536fb8f19d50817a3e3</citedby><cites>FETCH-LOGICAL-c543t-50c7e4d483afc1c24ca9a659d186b76c58abcd933becb1536fb8f19d50817a3e3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,27924,27925,33223,33224</link.rule.ids><backlink>$$Uhttp://econpapers.repec.org/article/eeejfinec/v_3a85_3ay_3a2007_3ai_3a2_3ap_3a518-551.htm$$DView record in RePEc$$Hfree_for_read</backlink></links><search><creatorcontrib>Griffin, John M.</creatorcontrib><creatorcontrib>Harris, Jeffrey H.</creatorcontrib><creatorcontrib>Topaloglu, Selim</creatorcontrib><title>Why are IPO investors net buyers through lead underwriters?</title><title>Journal of financial economics</title><description>In Nasdaq initial public offerings (IPOs) issued between 1997 and 2002, purchases of lead underwriter clients exceed sales by an amount equal to 8.79% of the total issue. We find that lead underwriter clients do not buy to build larger long-term positions, capitalize on superior execution quality, or because of clientele effects. However, characteristics of net buying that are at odds with these explanations and other behaviors (like institutional purchases of cold IPOs) are all consistent with lead underwriters engaging in quid pro quo arrangements with clients. Price contribution analysis shows that such client buying activity contributes significantly to first-day price increases.</description><subject>Financial risks</subject><subject>Information economics</subject><subject>Initial public offering</subject><subject>Initial public offerings</subject><subject>Investment banks</subject><subject>Investors</subject><subject>IPO</subject><subject>Laddering</subject><subject>Lead underwriter</subject><subject>NASDAQ trading</subject><subject>Ownership and control</subject><subject>Risk management</subject><subject>Stockbrokers</subject><subject>Studies</subject><subject>Syndicate</subject><subject>Underwriting</subject><subject>Venture capital</subject><issn>0304-405X</issn><issn>1879-2774</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2007</creationdate><recordtype>article</recordtype><sourceid>8BJ</sourceid><recordid>eNqFUE1r3DAUFKWFbrf9CQWTQ292JMuSZXIIIeSTwPaQ0N4esvzcldm1N5K9Yf993-Klh1wqGM2DNzM8hrHvgmeCC33eZV3re3RDlnOuMpFnRB_YQpiySvOyLD6yBZe8SAuufn9mX2LsOL1SVQt28Wt9SGzA5OHnKvH9HuM4hJj0OCb1dEAax3UYpj_rZIO2Saa-wfAW_Eiby6_sU2s3Eb-deMlebm-er-_Tp9Xdw_XVU-pUIcdUcVdi0RRG2tYJlxfOVlarqhFG16V2ytjaNZWUNbpaKKnb2rSiahQ3orQS5ZL9mHN3YXid6ELY-uhws7E9DlMEqXWVa6NJePZO2A1T6Ok2yKXQFReSk0jNIheGGAO2sAt-a8MBBIdjn9DBqU849gkiByLyPc6-gDt0_0yIOKthD9IaRd-BQM6SyB9Hwo6ghAGlBKzHLYVdzmFIve09BojOY--w8QHdCM3g_3POX6JKmao</recordid><startdate>20070801</startdate><enddate>20070801</enddate><creator>Griffin, John M.</creator><creator>Harris, Jeffrey H.</creator><creator>Topaloglu, Selim</creator><general>Elsevier B.V</general><general>Elsevier</general><general>Elsevier Sequoia S.A</general><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>20070801</creationdate><title>Why are IPO investors net buyers through lead underwriters?</title><author>Griffin, John M. ; Harris, Jeffrey H. ; Topaloglu, Selim</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c543t-50c7e4d483afc1c24ca9a659d186b76c58abcd933becb1536fb8f19d50817a3e3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2007</creationdate><topic>Financial risks</topic><topic>Information economics</topic><topic>Initial public offering</topic><topic>Initial public offerings</topic><topic>Investment banks</topic><topic>Investors</topic><topic>IPO</topic><topic>Laddering</topic><topic>Lead underwriter</topic><topic>NASDAQ trading</topic><topic>Ownership and control</topic><topic>Risk management</topic><topic>Stockbrokers</topic><topic>Studies</topic><topic>Syndicate</topic><topic>Underwriting</topic><topic>Venture capital</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Griffin, John M.</creatorcontrib><creatorcontrib>Harris, Jeffrey H.</creatorcontrib><creatorcontrib>Topaloglu, Selim</creatorcontrib><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of financial economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Griffin, John M.</au><au>Harris, Jeffrey H.</au><au>Topaloglu, Selim</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Why are IPO investors net buyers through lead underwriters?</atitle><jtitle>Journal of financial economics</jtitle><date>2007-08-01</date><risdate>2007</risdate><volume>85</volume><issue>2</issue><spage>518</spage><epage>551</epage><pages>518-551</pages><issn>0304-405X</issn><eissn>1879-2774</eissn><coden>JFECDT</coden><abstract>In Nasdaq initial public offerings (IPOs) issued between 1997 and 2002, purchases of lead underwriter clients exceed sales by an amount equal to 8.79% of the total issue. We find that lead underwriter clients do not buy to build larger long-term positions, capitalize on superior execution quality, or because of clientele effects. However, characteristics of net buying that are at odds with these explanations and other behaviors (like institutional purchases of cold IPOs) are all consistent with lead underwriters engaging in quid pro quo arrangements with clients. Price contribution analysis shows that such client buying activity contributes significantly to first-day price increases.</abstract><cop>Amsterdam</cop><pub>Elsevier B.V</pub><doi>10.1016/j.jfineco.2005.12.005</doi><tpages>34</tpages><oa>free_for_read</oa></addata></record>
fulltext	fulltext
identifier	ISSN: 0304-405X
ispartof	Journal of financial economics, 2007-08, Vol.85 (2), p.518-551
issn	0304-405X 1879-2774
language	eng
recordid	cdi_proquest_miscellaneous_36692686
source	International Bibliography of the Social Sciences (IBSS); ScienceDirect Freedom Collection
subjects	Financial risks Information economics Initial public offering Initial public offerings Investment banks Investors IPO Laddering Lead underwriter NASDAQ trading Ownership and control Risk management Stockbrokers Studies Syndicate Underwriting Venture capital
title	Why are IPO investors net buyers through lead underwriters?
url	http://sfxeu10.hosted.exlibrisgroup.com/loughborough?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2024-12-28T11%3A43%3A33IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Why%20are%20IPO%20investors%20net%20buyers%20through%20lead%20underwriters?&rft.jtitle=Journal%20of%20financial%20economics&rft.au=Griffin,%20John%20M.&rft.date=2007-08-01&rft.volume=85&rft.issue=2&rft.spage=518&rft.epage=551&rft.pages=518-551&rft.issn=0304-405X&rft.eissn=1879-2774&rft.coden=JFECDT&rft_id=info:doi/10.1016/j.jfineco.2005.12.005&rft_dat=%3Cproquest_cross%3E36692686%3C/proquest_cross%3E%3Cgrp_id%3Ecdi_FETCH-LOGICAL-c543t-50c7e4d483afc1c24ca9a659d186b76c58abcd933becb1536fb8f19d50817a3e3%3C/grp_id%3E%3Coa%3E%3C/oa%3E%3Curl%3E%3C/url%3E&rft_id=info:oai/&rft_pqid=231690130&rft_id=info:pmid/&rfr_iscdi=true