A Study of Underwriters' Experience With Unseasoned New Issues

Brian M. Neuberger and Carl T. Hammond

Journal of Financial and Quantitative Analysis, 1974, vol. 9, issue 2, 165-177

Abstract: One of the phenomena on Wall Street during the sixties was the new issues market. During the decade new issues became a popular investment alternative, particularly in the bull markets of 1962, 1966, and 1968. The height of enthusiasm occurred in the hot new issues market of the fiscal year 1968–1969 when 2,171 issues were offered to the public. This interest in new issues was followed by studies such as Reilly and Hatfield [12], McDonald and Fisher [9], the SEC [13], and others, all of which show that there is a downward bias in the issue price of new issues. Why this downward bias is present was treated later by Logue [5]. Although these studies also suggest that there is a difference in the pricing behavior by individual underwriters, none of the previous studies has addressed itself specifically to this point.

Date: 1974
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