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The vicar, the widow, or the gentleman: who gets allocated IPO shares?

Author

Listed:
  • Lyndon Moore

    (University of Melbourne)

  • Sturla Fjesme

    (University of Melbourne)

  • Neil Galpin

    (University of Melbourne)

Abstract

"Rock’s (1986) seminal paper derives that ‘informed’ investors will be allocated more shares in good (more underpriced) IPOs rather than bad IPOs, whereas ‘uninformed’ investors receive more shares in bad IPOs. Due to data limitations the literature typically characterizes institutional investors as ‘informed’ and retail investors as ‘uninformed’. We examine 554 IPOs in the U.K. from 1891 to 1911. We have data on the occupation and geographical location of all allocated shareholders for 141 of these IPOs. Shareholders who are both occupationally and geographically close to the firm receive larger allocations of good IPOs, and avoid bad IPOs. In contrast institutions receive smaller allocations of good IPOs."

Suggested Citation

  • Lyndon Moore & Sturla Fjesme & Neil Galpin, 2015. "The vicar, the widow, or the gentleman: who gets allocated IPO shares?," Working Papers 15011, Economic History Society.
    • Handle: RePEc:ehs:wpaper:15011
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    File URL: http://www.ehs.org.uk/dotAsset/c8b17686-c8d5-4888-ad96-2ae17d45a43f.docx
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    Citations

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    Cited by:

    1. Shima Amini & Steven Toms, 2018. "Accessing capital markets: Aristocrats and new share issues in the British bicycle boom of the 1890s," Business History, Taylor & Francis Journals, vol. 60(2), pages 231-256, February.

    More about this item

    Keywords

    IPO allocations; Equity issue; London Stock Exchange;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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