Journal of Finance and Economics

Journal of Finance and Economics

ISSN: 2291-4951 (Print)    ISSN: 2291-496X (Online)

Volume 3 (2015), No. 3, Pages 26-37

DOI: 10.12735/jfe.v3i3p26

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The Changing Influence of Underwriter Prestige on Initial Public Offerings

Jarrod Johnston1  Ivan Roten1 

1Walker College of Business, Appalachian State University, Boone, North Carolina, USA

URL: https://doi.org/10.12735/jfe.v3i3p26

To Cite this Article     Article Views: 653     Downloads: 409  Since deposited on 2015-08-22

Abstract

Existing research finds that underwriter prestige is related to underpricing among initial public offerings. However, the relation is not stable through time. This study finds that the relation changed from negative to positive in 1993. When the sample is divided by level of underwriter prestige, underpricing by high-prestige underwriters exceeded underpricing by low-prestige underwriters for 18 of 20 years following 1993. The difference in underpricing between high- and low-prestige underwriters peaked in 1999 but continued after the market correction in 2000. High-prestige underwriters are responsible for the shift in underpricing that occurred in 1993.

JEL Classifications: G14, G24, G32

Keywords: certification; IPO pricing; IPOs; partial adjustment; underpricing; underwriter reputation

To Cite this Article: Johnston, J., & Roten, I. (2015). The changing influence of underwriter prestige on initial public offerings. Journal of Finance and Economics, 3(3), 26-37. https://doi.org/10.12735/jfe.v3i3p26

Copyright © Jarrod Johnston & Ivan Roten

Creative Commons License
This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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The Changing Influence of Underwriter Prestige on Initial Public Offerings
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