Evidence of Information Spillovers in the Production of Investment Banking Services

Alexander Ljungqvist (), Lawrence M Benveniste, William J Wilhelm and Xiaoyun Yu

No 2988, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We present evidence that firms attempting IPOs learn from the experience of their contemporaries. These information spillovers affect revisions in offer terms and the decision whether to carry through with an offering. The evidence also supports the argument that IPOs are implicitly bundled as a means of promoting more equitable sharing of information production costs. One apparent consequence of this behaviour is that while initial returns and IPO volume are positively correlated in the aggregate, the correlation is negative among contemporaneous offerings subject to a common valuation factor. These findings are consistent with the Benveniste, Busaba, and Wilhelm (2001) argument that the dynamics of volume and initial returns in primary equity markets reflect, at least in part, an institutional response to information externalities.

Keywords: Initial public offerings; Investment banking; Information externalities; Going public decision (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2001-10
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Evidence of Information Spillovers in the Production of Investment Banking Services (2003)
Working Paper: Evidence of Information Spillovers in the Production of Investment Banking Services (2002)
Working Paper: Evidence of Information Spillovers in the Production of Investment Banking Services (2002)
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