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Evidence of Information Spillovers in the Production of Investment Banking Services

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Listed:
  • Lawrence M. Benveniste
  • Alexander Ljungqvist
  • William J. Wilhelm
  • Xiaoyun Yu

Abstract

We provide evidence that firms attempting IPOs condition offer terms and the decision whether to carry through with an offering on the experience of their primary market contemporaries. Moreover, while initial returns and IPO volume are positively correlated in the aggregate, the correlation is negative among contemporaneous offerings subject to a common valuation factor. Our findings are consistent with investment banks implicitly bundling offerings subject to a common valuation factor to achieve more equitable internalization of information production costs and thereby preventing coordination failures in primary equity markets.

Suggested Citation

  • Lawrence M. Benveniste & Alexander Ljungqvist & William J. Wilhelm & Xiaoyun Yu, 2002. "Evidence of Information Spillovers in the Production of Investment Banking Services," OFRC Working Papers Series 2002fe06, Oxford Financial Research Centre.
  • Handle: RePEc:sbs:wpsefe:2002fe06
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    File URL: http://www.finance.ox.ac.uk/file_links/finecon_papers/2002fe06.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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