Uncertainty, prospectus content, and the pricing of initial public offerings

Nicholas Crain, Robert Parrino and Raji Srinivasan

Journal of Empirical Finance, 2021, vol. 64, issue C, 160-182

Abstract: This study reports evidence on the relation between the pre-market due diligence and book-building processes in determining initial public offering (IPO) share prices. The evidence suggests that there is a complementarity between these processes that has not been discussed in the literature. We find that when there is greater uncertainty regarding the value of the shares, more information of the type that investors are likely to have a comparative advantage in evaluating tends to be included in the offering prospectus prior to the roadshow. The increase in these disclosures is, in turn, associated with greater information discovery during book-building.

Keywords: Initial public offering; Underpricing; Investment banking (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:64:y:2021:i:c:p:160-182

DOI: 10.1016/j.jempfin.2021.08.007

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