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Mutual Fund Participation in IPOs: Thai Evidence

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  • Kanis Saengchote
  • Jananya Sthienchoak

Abstract

Underwriters and co-managers play an important role in IPOs, but because they often have affiliated mutual funds, concerns about conflicts of interest can arise. On the one hand, they can use this affiliation for the benefit of their asset management business (the information advantage hypothesis); on the other hand, they can use mutual funds under their control to support their IPO clients (the quid pro quo hypothesis). In this article, we find that the behavior of lead underwriter-affiliated funds in Thailand is more consistent with the information advantage hypothesis and co-manager-affiliated funds more consistent with the quid pro quo hypothesis. We also find further evidence of strategic placement of IPO stocks within fund family.

Suggested Citation

  • Kanis Saengchote & Jananya Sthienchoak, 2020. "Mutual Fund Participation in IPOs: Thai Evidence," PIER Discussion Papers 131, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:131
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    More about this item

    Keywords

    Initial Public Offerings; Mutual Funds; Conflicts of Interest;
    All these keywords.

    JEL classification:

    • 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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