Dual Class IPOs ARE Underpriced Less Severely

Scott B. Smart and Chad J. Zutter

The Financial Review, 2008, vol. 43, issue 1, 85-106

Abstract: We analyze a sample of dual and single class initial public offerings (IPOs) to investigate whether empirical estimates of underpricing determinants are consistent across alternative measures of firm size and alternative techniques intended to account for underwriter price stabilization efforts. We find that results from long‐standing methods for estimating underpricing relations are generally robust to one's choice of size proxy and are consistent with estimates obtained from censored regressions of first‐day returns and from least squares regressions of longer horizon initial returns. We also confirm an existing finding in the literature that dual class IPOs endure less underpricing than do single class firms.

Date: 2008
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https://doi.org/10.1111/j.1540-6288.2007.00187.x

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