IPO pricing and allocation: a survey of the views of institutional investers
AbstractDespite the central importance of investors to all IPO theories, relatively little is known about their role in practice. In this paper we survey institutional investors about how they assess IPOs, what information they provide to the investment banking syndicate, and the factors they believe influence allocations. Although the theoretical IPO literature has tended to focus on information revelation, the survey raises doubts as to the extent of incremental information production and whether bookrunners are, in practice, able to infer investors` valuations from their bids. We find that investor characteristics, in particular broking relationships with the bookrunner, are perceived to be the most important factors influencing allocations, which supports the view that IPO allocations are part of implicit quid pro quo deals with investment banks.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 2006-FE-13.
Date of creation: 01 Dec 2006
Date of revision:
Other versions of this item:
- Tim Jenkinson & Howard Jones, 2009. "IPO Pricing and Allocation: A Survey of the Views of Institutional Investors," Review of Financial Studies, Society for Financial Studies, vol. 22(4), pages 1477-1504, April.
- Tim Jenkinson & Howard Jones, 2006. "IPO pricing and allocation: a survey of the views of institutional investors," OFRC Working Papers Series 2006fe13, Oxford Financial Research Centre.
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
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- Degeorge, François & Derrien, François & Womack, Kent L., 2010.
"Auctioned IPOs: The US evidence,"
Journal of Financial Economics,
Elsevier, vol. 98(2), pages 177-194, November.
- François DEGEORGE & François DERRIEN & Kent L. WOMACK, . "Auctioned IPOs: The U.S. Evidence," Swiss Finance Institute Research Paper Series 08-38, Swiss Finance Institute.
- Degeorge, F. & Derrien, F. & Womack, K.L., 2009. "Auctioned IPOs: The U.S. Evidence," Discussion Paper 2009-37 S, Tilburg University, Center for Economic Research.
- Boreiko, Dmitri & Lombardo, Stefano, 2011. "Italian IPOs: Allocations and claw back clauses," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 21(1), pages 127-143, February.
- Neupane, Suman & Poshakwale, Sunil S., 2012. "Transparency in IPO mechanism: Retail investors’ participation, IPO pricing and returns," Journal of Banking & Finance, Elsevier, vol. 36(7), pages 2064-2076.
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