Global Integration in Primary Equity Markets: The Role of U.S. Banks and U.S. Investors

Alexander Ljungqvist (), Tim Jenkinson and William J. Wilhelm, Jr.

The Review of Financial Studies, 2003, vol. 16, issue 1, 63-99

Abstract: We examine the costs and benefits of the global integration of initial public offering (IPO) markets associated with the diffusion of U.S. underwriting methods in the 1990s. Bookbuilding is becoming increasingly popular outside the United States and typically costs twice as much as a fixed-price offer. However, on its own, bookbuilding only leads to lower underpricing when conducted by U.S. banks and-or targeted at U.S. investors. For most issuers, the gains associated with lower underpricing outweighed the additional costs associated with hiring U.S. banks or marketing in the United States. This suggests a quality-price trade-off contrasting with the findings of Chen and Ritter, particularly since non-U.S. issuers raising US$20 million--US$80 million also typically pay a 7% spread when U.S. banks and investors are involved. Copyright 2003, Oxford University Press.

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (98)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Global Integration in Primary Equity Markets: The Role of U.S. Banks and U.S. Investors (2001)
Working Paper: Global Integration in Primary Equity Markets: The Role of U.S. Banks and U.S. Investors (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:rfinst:v:16:y:2003:i:1:p:63-99

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().