IPO pricing and allocation: a survey of the views of institutional investors
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 investorsâ€™ 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 Oxford Financial Research Centre in its series OFRC Working Papers Series with number 2006fe13.
Date of creation: 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 investers," Economics Series Working Papers 2006-FE-13, University of Oxford, Department of Economics.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-03 (All new papers)
- NEP-CFN-2007-02-03 (Corporate Finance)
- NEP-FMK-2007-02-03 (Financial Markets)
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- François DEGEORGE & François DERRIEN & Kent L. WOMACK, .
"Auctioned IPOs: The U.S. Evidence,"
Swiss Finance Institute Research Paper Series
08-38, Swiss Finance Institute.
- 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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