The vicar, the widow, or the gentleman: who gets allocated IPO shares?

Lyndon Moore, Sturla Fjesme and Neil Galpin
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Lyndon Moore: University of Melbourne
Neil Galpin: University of Melbourne

No 15011, Working Papers from Economic History Society

Abstract: "Rock’s (1986) seminal paper derives that ‘informed’ investors will be allocated more shares in good (more underpriced) IPOs rather than bad IPOs, whereas ‘uninformed’ investors receive more shares in bad IPOs. Due to data limitations the literature typically characterizes institutional investors as ‘informed’ and retail investors as ‘uninformed’. We examine 554 IPOs in the U.K. from 1891 to 1911. We have data on the occupation and geographical location of all allocated shareholders for 141 of these IPOs. Shareholders who are both occupationally and geographically close to the firm receive larger allocations of good IPOs, and avoid bad IPOs. In contrast institutions receive smaller allocations of good IPOs."

Keywords: IPO allocations; Equity issue; London Stock Exchange (search for similar items in EconPapers)
JEL-codes: G24 G28 (search for similar items in EconPapers)
Date: 2015-03
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Citations: View citations in EconPapers (1)

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