Do Institutions Receive Favorable Allocations in IPOs with Better Long-Run Returns?
Publication Type
Journal Article
Publication Date
12-2006
Abstract
We analyze allocations to institutional and retail investors in 441 initial public offerings (IPOs). In addition to the well-known favorable first-day returns, we show that institutions also obtain more allocations in IPOs with better long-term performance. We find that initial institutional flips help predict future returns, suggesting that at least some institutions retain valuable private information about IPO firms. Collectively, these findings illustrate the importance of aftermarket relations between underwriters and investors and that underwriters have discretionary means to compensate IPO investors beyond first-day returns and price stabilization.
Discipline
Business | Corporate Finance
Research Areas
Finance
Publication
Journal of Financial and Quantitative Analysis
Volume
41
Issue
4
First Page
809
Last Page
828
ISSN
0022-1090
Identifier
10.1017/S0022109000002659
Publisher
Cambridge University Press
Citation
Boehmer, Beatrice; BOEHMER, Ekkehart; and Fishe, Raymond P. H..
Do Institutions Receive Favorable Allocations in IPOs with Better Long-Run Returns?. (2006). Journal of Financial and Quantitative Analysis. 41, (4), 809-828.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4663
Additional URL
https://doi.org/10.1017/S0022109000002659