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IPO Placement Risk and the Number of Co-Managers


  • Wallace N. Davidson
  • Biao Xie
  • Weihong Xu


Previous studies show that co-managers mainly affect initial public offering (IPO) aftermarket activities. We investigate the role of co-managers in IPO pre-market activities. We argue that co-managers help reduce IPO placement risk and hypothesize that IPO issuers hire more co-managers when placement risk is higher. We find the number of co-managers is positively associated with three proxies for placement risk. IPOs with more price uncertainty and high-tech IPOs hire more co-managers, while IPOs in regulated industries hire fewer co-managers. We also find larger IPOs, recent IPOs, and IPOs with more reputable lead underwriters hire more co-managers. Copyright 2006, The Eastern Finance Association.

Suggested Citation

  • Wallace N. Davidson & Biao Xie & Weihong Xu, 2006. "IPO Placement Risk and the Number of Co-Managers," The Financial Review, Eastern Finance Association, vol. 41(3), pages 405-418, August.
  • Handle: RePEc:bla:finrev:v:41:y:2006:i:3:p:405-418

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