Does the Effect of Revealed Private Information on Initial Public Offering (IPO) First Trading Day Return Differ by IPO Market Heat?

44 Pages Posted: 24 Sep 2014

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

Abstract

By IPO market regime, I decompose the effect of revealed private information on the initial return of IPOs (initial public offerings) into adjusted and unadjusted private information and find (i) investment banks partially adjust the offer price in return for revealed private information in all but the non‐hot IPO market; (ii) the economic importance of private information associated with IPOs (and hence agency costs) is procyclical; and (iii) industry information spillovers between IPOs occur only in the hot and very‐hot IPO markets.

Keywords: Initial public offering, Agency costs, Information spillovers, Private information, Bookbuilding

Suggested Citation

O'Connor Keefe, Michael, Does the Effect of Revealed Private Information on Initial Public Offering (IPO) First Trading Day Return Differ by IPO Market Heat? (September 2014). Accounting & Finance, Vol. 54, Issue 3, pp. 921-964, 2014, Available at SSRN: https://ssrn.com/abstract=2500506 or http://dx.doi.org/10.1111/acfi.12015

Michael O'Connor Keefe (Contact Author)

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

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