Advanced Search
MyIDEAS: Login to save this paper or follow this series

Good IPOs draw in bad: Inelastic banking capacity and hot markets

Contents:

Author Info

  • Naveen Khanna
  • Thomas H. Noe
Registered author(s):

    Abstract

    We posit that screening IPOs requires specialized labor which, in the short run, is in fixed supply.� Hence, a sudden increase in demand for IPO financing increases the compensation of IPO screening labor.� Increased compensation results in reduced screening which encourages sub-marginal firms to enter the IPO market, further increasing the demand for screening labor and thus its compensation.� The model's conclusions are consistent with empirical findings of increased underpricing during hot markets, positive correlation between issue volume and underpricing, negative correlation between issue volume and information production, and with tipping points between hot and cold markets characterized by discontinuous jumps in volume, underpricing, and issue quality.� Finally, the model makes sharp and so far untested predictions relating IPO market conditions both to the fundamental values of IPO firms and to the returns to investment banks and investment banking labor.

    Download Info

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Bibliographic Info

    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 2008fe10.

    as in new window
    Length:
    Date of creation: 01 Jan 2008
    Date of revision:
    Handle: RePEc:oxf:wpaper:2008fe10

    Contact details of provider:
    Postal: Manor Rd. Building, Oxford, OX1 3UQ
    Email:
    Web page: http://www.economics.ox.ac.uk/
    More information through EDIRC

    Related research

    Keywords: IPO; Underpricing; Labor Constraint;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Thomas J. Chemmanur & Jie He, 2012. "IPO Waves, Product Market Competition, and the Going Public Decision: Theory and Evidence," Working Papers, Center for Economic Studies, U.S. Census Bureau 12-07, Center for Economic Studies, U.S. Census Bureau.
    2. Hertzel, Michael G. & Huson, Mark R. & Parrino, Robert, 2012. "Public market staging: The timing of capital infusions in newly public firms," Journal of Financial Economics, Elsevier, Elsevier, vol. 106(1), pages 72-90.
    3. Boeh, Kevin & Dunbar, Craig, 2014. "IPO waves and the issuance process," Journal of Corporate Finance, Elsevier, Elsevier, vol. 25(C), pages 455-473.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:2008fe10. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.