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IPOs, clustering, indirect learning and filing independently

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  • Colaco, Hugh M.J.
  • Ghosh, Chinmoy
  • Knopf, John D.
  • Teall, John L.
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    Abstract

    IPO underpricing has been attributed to valuation uncertainty, which can be at least partially resolved by the indirect learning associated with IPO clustering [Benveniste, L.M., Ljungqvist, A., Wilhelm, W.J., Yu, X.Y., 2003. Evidence of information spillovers in the production of investment banking services. Journal of Finance 58, 577-608]. We examine why firms might choose not to issue their IPOs contemporaneously with clusters of similar firms, forgoing opportunities to learn from their peers. We find that the willingness to file an IPO without the benefit of indirect learning from peer firm IPOs is directly related to insiders' needs for portfolio diversification and the firm's need to raise capital.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 33 (2009)
    Issue (Month): 11 (November)
    Pages: 2070-2079

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    Handle: RePEc:eee:jbfina:v:33:y:2009:i:11:p:2070-2079

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    Web page: http://www.elsevier.com/locate/jbf

    Related research

    Keywords: IPO Underpricing Underwriter Learning;

    References

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    Cited by:
    1. Garner, Jacqueline L. & Marshall, Beverly B., 2010. "The non-7% solution," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1664-1674, July.
    2. Gao, Ning & Jain, Bharat A., 2011. "Founder CEO management and the long-run investment performance of IPO firms," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1669-1682, July.
    3. Xie, Xiaoying, 2010. "Are publicly held firms less efficient? Evidence from the US property-liability insurance industry," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1549-1563, July.

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