Do advisors improve IPO outcomes?

75 Pages Posted: 12 Jun 2019 Last revised: 19 Feb 2021

See all articles by Emmanuel Pezier

Emmanuel Pezier

City University London - Sir John Cass Business School

Howard Jones

University of Oxford, Saïd Business School

Date Written: January 19, 2021

Abstract

Issuers increasingly appoint advisors in IPOs alongside underwriters. We find advisors in aggregate have no effect on first-day returns, withdrawals, or underwriting spreads in European IPOs. However, underpricing of IPOs with generalist advisors (who offer diverse services alongside IPOs) is significantly greater than with specialist IPO advisors and is at the expense of unsophisticated issuers. We link these findings to the different incentives of generalist and specialist advisors. Our results are consistent with naivety on the part of unsophisticated issuers, but more likely with unsophisticated issuers willingly paying for the reputational and other benefits of generalist advisors with IPO underpricing.

Keywords: initial public offerings, underpricing, advisors, incentives

JEL Classification: G24, G30

Suggested Citation

Pezier, Emmanuel and Jones, Howard, Do advisors improve IPO outcomes? (January 19, 2021). Available at SSRN: https://ssrn.com/abstract=3400906 or http://dx.doi.org/10.2139/ssrn.3400906

Emmanuel Pezier (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Howard Jones

University of Oxford, Saïd Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/about-us/people/howard-jones

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