Mutual Fund Participation in IPOs: Thai Evidence

Kanis Saengchote and Jananya Sthienchoak

No 131, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: Underwriters and co-managers play an important role in IPOs, but because they often have affiliated mutual funds, concerns about conflicts of interest can arise. On the one hand, they can use this affiliation for the benefit of their asset management business (the information advantage hypothesis); on the other hand, they can use mutual funds under their control to support their IPO clients (the quid pro quo hypothesis). In this article, we find that the behavior of lead underwriter-affiliated funds in Thailand is more consistent with the information advantage hypothesis and co-manager-affiliated funds more consistent with the quid pro quo hypothesis. We also find further evidence of strategic placement of IPO stocks within fund family.

Keywords: Initial Public Offerings; Mutual Funds; Conflicts of Interest (search for similar items in EconPapers)
JEL-codes: G23 G24 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2020-04
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