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On the Origin of IPO Profits

Sergey Kovbasyuk, David Brown () and Tamara Nefedova ()
Additional contact information
David Brown: University of Arizona
Tamara Nefedova: Universit Ì e Paris Dauphine-PSL

No w0283, Working Papers from New Economic School (NES)

Abstract: By combining investors' portfolio holdings with trading and commissions data, we analyze the determinants of IPO allocations. We distinguish among common explanations for investors' IPO profits: information revelation, quid pro quo arrangements (related to commissions), and post-IPO trading behaviors. We find that information proxies explain the majority of the variation in IPO profits, while commissions and post-IPO trading behaviors explain relatively little. Commissions and post-IPO trading matter at the extensive, but not intensive, margins, while information matters at both. Different explanations matter for allocations and IPO profits to Investment Managers, Hedge Funds, and Banks, Pension Funds and Insurers.

Keywords: IPOs; Allocations; Institutional Investors; Underwriters; Money Left on the Table (search for similar items in EconPapers)
JEL-codes: G23 G24 G32 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2021-11
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-fmk
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https://www.nes.ru/files/Preprints-resh/WP283.pdf (application/pdf)

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