The role of a long-term investor-underwriter relationship in auctioned IPOs

Ping Jiang, Xinjian Shao and Yi Xue

Journal of Banking & Finance, 2022, vol. 135, issue C

Abstract: Using a unique, manually collected bidding dataset in China, we investigate the role of a long-term investor–underwriter relationship in auctioned initial public offerings (IPO). We find that a long-term investor–underwriter relationship helped improve the efficiency of an auction as a mechanism of IPOs. First, the relationship improved investors’ participation in IPOs and reduced participation uncertainty. Second, it mitigated the free riding problem. Third, it motivated investors to produce more accurate information. Finally, we identify the potential benefit of a long-term investor–underwriter relationship.

Keywords: Auctioned IPO; Long-term investor–underwriter relationship; Allocation right; Relation investors; Frequent investors (search for similar items in EconPapers)
JEL-codes: G24 G28 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:135:y:2022:i:c:s0378426621003484

DOI: 10.1016/j.jbankfin.2021.106397

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