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IPOs, clustering, indirect learning and filing independently

  • Colaco, Hugh M.J.
  • Ghosh, Chinmoy
  • Knopf, John D.
  • Teall, John L.
Registered author(s):

    IPO underpricing has been attributed to valuation uncertainty, which can be at least partially resolved by the indirect learning associated with IPO clustering [Benveniste, L.M., Ljungqvist, A., Wilhelm, W.J., Yu, X.Y., 2003. Evidence of information spillovers in the production of investment banking services. Journal of Finance 58, 577-608]. We examine why firms might choose not to issue their IPOs contemporaneously with clusters of similar firms, forgoing opportunities to learn from their peers. We find that the willingness to file an IPO without the benefit of indirect learning from peer firm IPOs is directly related to insiders' needs for portfolio diversification and the firm's need to raise capital.

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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 33 (2009)
    Issue (Month): 11 (November)
    Pages: 2070-2079

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    Handle: RePEc:eee:jbfina:v:33:y:2009:i:11:p:2070-2079
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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