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Valuation and performance of reallocated IPO shares

Author

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  • Bonaventura, Matteo
  • Giudici, Giancarlo
  • Vismara, Silvio

Abstract

Shares in book-building IPOs can be reallocated in different proportions between retail and institutional investors, compared to the target allocation initially reported in official prospectuses. We use a sample of 195 Italian IPOs to discover an increased reallocation to retail investors in IPOs overvalued compared to peer firms. Institutional investors benefit from reallocation as they obtain more shares in IPOs with better long run performance.

Suggested Citation

  • Bonaventura, Matteo & Giudici, Giancarlo & Vismara, Silvio, 2018. "Valuation and performance of reallocated IPO shares," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 54(C), pages 15-26.
    • Handle: RePEc:eee:intfin:v:54:y:2018:i:c:p:15-26
    DOI: 10.1016/j.intfin.2017.05.005
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    Cited by:

    1. Acheampong, Albert & Elshandidy, Tamer, 2021. "Does soft information determine credit risk? Text-based evidence from European banks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    2. Paul P. Momtaz, 2023. "The economics of PIPEs, revisited," Small Business Economics, Springer, vol. 60(1), pages 59-83, January.
    3. Elshandidy, Tamer & Acheampong, Albert, 2021. "Does hedge disclosure influence cost of capital for European banks?," International Review of Financial Analysis, Elsevier, vol. 78(C).
    4. Tzu-Chun Sheng & Alvin Chang & Shu-Hui Lan & Shih-Cheng Li, 2020. "Analysis of the Dividend Policy Decision-Making Mechanism of Chinese and Taiwanese Lithium Battery Industries," Mathematics, MDPI, vol. 8(10), pages 1-16, October.

    More about this item

    Keywords

    Initial public offerings; IPO allocation; Long run valuation; IPO valuation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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