Underwriting in the Australian IPO markets: Determinants and pricing

Alastair Marsden, Zoltan Murgulov, S Ghon Rhee and Madhu Veeraraghavan
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Alastair Marsden: Formerly with The University of Auckland, Auckland, New Zealand
Zoltan Murgulov: Department of Banking and Finance, Monash Business School, Monash University, Melbourne, VIC, Australia
S Ghon Rhee: Department of Finance, Shidler College of Business, University of Hawai’i, Honolulu, HI, USA
Madhu Veeraraghavan: T.A. Pai Management Institute, Manipal Academy of Higher Education, Manipal, India

Australian Journal of Management, 2024, vol. 49, issue 3, 403-427

Abstract: We examine the factors that explain the underwriting decision and underwriting fees for Australian initial public offerings (IPOs). Using a sample of Australian IPOs, spanning the period 1999–2019, we document the following results. IPOs that allow oversubscription of the shares, bookbuild offers, and IPOs with a greater delay to listing, are less likely to be underwritten. We also find that more prestigious underwriters are associated with greater IPO underpricing, while charging lower percent underwriting fees. Prestigious underwriters capture side benefits associated with their reputational status by offering their clients or favoured investors with discounted shares. JEL Classification: G12, G19, G38

Keywords: Australian Securities Exchange; bookbuild; initial public offerings; underwriting (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:49:y:2024:i:3:p:403-427

DOI: 10.1177/03128962221139728

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