We use the tools of mechanism design, combined with the theory of risk measures, to analyze how a cash constrained owner of an asset with known stochastic returns raises capital from a population of investors that differ in their risk aversion and budget constraints. The issuer partitions the...

The aim of the paper is to analyse the association between the use of accrual-based and real earnings management practices before the company goes public and the decision of institutional investors on buying or refraining from buying shares offered in initial public offering (IPO). The sample...

This paper investigates the impact of ETF ownership on seasoned equity offerings (SEOs). We find that increases to firms’ ETF ownership is positively related to their propensity to conduct an SEO. ETF ownership is also associated with less negative SEO announcement returns, smaller discounts,...

This paper empirically examines the underwriter’s competitive behavior in the Japanese IPO underwriting markets. We apply a discrete choice model to estimate issuers’ demand for IPO underwriting services and calculate the predicted markups. We apply the model selection test to distinguish...

Rights offers are a relatively common capital-raising method. In a rights offer, the company’s existing shareholders are given the opportunity to purchase newly-issued shares in proportion to the amount of shares they already own for a specific subscription price per-share. Because all...

Does physical proximity to monitoring capital affect the firm's IPO decision? Using a geographic framework, we measure the amount of monitoring capital of equity investors and banks in each U.S. region. When regional equity capital is abundant, collateral-poor resident firms are more likely to...

The authors compare the post-issue stock and operating performance of rights issue versus public offer firms using Korean data. The authors find that the stock returns of rights issue firms are less negative than those of public offering firms during the three years subsequent to the seasoned...

We create a novel dataset to examine the nature and determinants of dual-class IPOs. We document that dual-class firms have different types of controlling shareholders and wedges between voting and economic rights. We find that the founders' wedge is largest when founders have stronger...

This study provides novel evidence that law firms representing issuers have a material impact on economic outcomes in the IPO market. Fixed effects for legal counsel explain a significant portion of the variation in IPO underpricing, comparable to underwriter fixed effects documented in prior...

This paper reveals a non-monotonic impact of local mutual funds on municipal bond issuance. Offering yields are higher in states with open-end municipal bond funds, and with larger aggregate fund size. However, holding local fund size constant, yields are decreasing in the number of funds. Such...

In response to concerns over the use of book-building as the dominant price-setting mechanisms in IPOs, regulatory bodies in the emerging markets have implemented policies to restrict discretion exercised by underwriters. This study examines the regulatory policy effect on IPO underpricing,...

Leaders of private companies looking to go public must choose between a traditional IPO of their own or a SPAC merger. Despite the current popularity of SPAC mergers, there are at least three compelling reasons to opt for a conventional IPO from a business owner’s perspective

There is quid pro quo in auctioned IPOs. Using proprietary data on uniform-pricing IPO auctions, we show when the share allocation rule shifted from pro rata to lottery draw, fund families having pre-shift stronger brokerage commission ties with the underwriter submit bids later, place more...

We confirm prior evidence that bonds on average are offered at prices below their immediate post-offer secondary market prices. However, in cases where banks lead-manage their own bond offerings the underpricing is significantly less as compared to other non-self-marketed offerings. These...

The number of initial public offerings (IPOs) in the U.S. has been much lower since 2000 than in the prior two decades, although there was a surge in IPO activity in 2021. The Securities and Exchange Commission (SEC) has attempted to reduce the regulatory and cost burdens of going public....

Underwriters in public offerings provide invaluable service of guaranteeing that the issuer of shares would generate the desired cash to fulfil its strategic objectives. Underwriters bear enormous risks whenever there is undersubscription as they have to transfer cash to the issuer and figure it...

We document that higher bank debt proportion and shorter bank debt maturity structure reduce IPO underpricing. Attributing this relationship to information asymmetry, evidence shows that the IPO firms with greater bank debt intensity are not inherently different in firm quality as reflected by...

Do reputational concerns of financial intermediaries dampen credit booms and busts? Does this hold in the context of mortgage-backed securities? During a credit boom revolving around the securitization of West-Indian plantation-mortgages in the 1760s, high-reputation underwriters virtually...

Following a 2008 rule change by the U.S. Securities and Exchange Commission designed to simplify and expand smaller firms’ abilities to raise public equity, small firms increasingly issue public equity via confidentially-marketed public offerings (CMPOs). CMPOs pair confidential pre-offering...

Even as researchers, when we present our research to others, we are teachers. As teachers, our responsibility to others is manifold, to which we are held to a higher standard. It is upon the Truths (or falsehoods) that we teach that we are ultimately judged. This Applied Economics working paper...

We analyze the relation between the geographical locations of the institutions investing in IPO firms and IPO firm outcomes. Consistent with an information sharing hypothesis, we find that an increase in the geographical dispersion of the institutions investing in IPO firms is associated with...