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    To What Extent Are Investment Bank-Differentiating Factors Relevant For Firms Floating Moderate-Sized IPOs?

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    Sabarwal_2006_Floating-IPOs.pdf (560.2Kb)
    Issue Date
    2007
    Author
    Kulkarni, Kedar S.
    Sabarwal, Tarun
    Publisher
    Springer-Verlag
    Type
    Article
    Article Version
    Scholarly/refereed, author accepted manuscript
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    Abstract
    One explanation provided for the relatively high and increasingly stable spreads for moderate-sized IPOs ($20-$80 million) documented in Chen and Ritter (2000) is that issuing firms focus less on price and more on a combination of investment bank-differentiating factors (such as underwriter prestige, analyst coverage, industry expertise, under-pricing, price stabilization activities, liquidity provision, and so on,) and banks use industry-based differentiation as a source of market power. Using a new approach developed in a model of firm location choice due to Ellison and Glaeser (1997), this paper presents some evidence on the combined relevance of such bank-differentiating factors, over and above bank size, for firms choosing investment banks for floating IPOs. For moderate-sized IPOs, there is a little, but not much evidence that such factors are a good explanation for high and increasingly stable spreads. Other than in a few of the largest industries, bank-differentiating factors are not significantly relevant for a large proportion of industries. Moreover, one aggregate measure of differentiation is declining over time.
    Description
    The original publication is available at www.springerlink.com.
    URI
    http://hdl.handle.net/1808/9018
    DOI
    https://doi.org/10.1007/s10436-006-0054-y
    Collections
    • Economics Scholarly Works [183]
    Citation
    "Kulkarni, Kedar and Tarun Sabarwal (2007): “To What Extent Are Investment Bank-Differentiating Factors Relevant For Firms Floating Moderate-Sized IPOs?” http://dx.doi.org/10.1007/s10436-006-0054-y Annals of Finance, 3(3), July, 297-327.

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    Contact KU ScholarWorks
    785-864-8983
    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    Image Credits
     

     

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