Skip Navigation

This Article
Right arrow Full Text (PDF)
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Similar articles in ISI Web of Science
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrow Search for citing articles in:
ISI Web of Science (41)
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Habib, M. A.
Right arrow Articles by Ljungqvist, A. P.
Right arrow Search for Related Content
Related Collections
Right arrow G12 - Asset Pricing
Right arrow G14 - Information and Market Efficiency; Event Studies
Right arrow G32 - Financing Policy; Capital and Ownership Structure
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

Rev Fin 2001; 14:433-458
© 2001 the Society for Financial Studies

Article

Underpricing and entrepreneurial wealth losses in IPOs: theory and evidence

MA Habib1,z and AP Ljungqvist2
1 London Business School, Sussex Place Regent's Park, London NW1 4SA, UK
2 New York University, NY, USA
CEPR
z Corresponding author
E-mail: mhabib@london.edu

Abstract

We model owners as solving a multidimensional problem when taking their firms public. Owners can affect the level of underpricing through the choices they make in promoting an issue, such as which underwriter to hire or on what exchange to list. The benefits of reducing underpricing in this way depend on the owners' participation in the offering and the magnitude of the dilution they suffer on retained shares. We argue that the extent to which owners trade off underpricing and promotion is determined by the minimization of their wealth losses. Evidence from a sample of U.S. initial public offering confirms our empirical predictions.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?


This article has been cited by other articles:


Home page
 REV FINANC STUDHome page
A. Bodnaruk, E. Kandel, M. Massa, and A. Simonov
Shareholder Diversification and the Decision to Go Public
Rev. Financ. Stud., August 30, 2007; (2007) hhm036v1.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
K. Kutsuna and R. Smith
Why Does Book Building Drive Out Auction Methods of IPO Issuance? Evidence from Japan
Rev. Financ. Stud., October 1, 2004; 17(4): 1129 - 1166.
[Abstract] [Full Text] [PDF]


Disclaimer:
Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.