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Evidence of Information Spillovers in the Production of Investment Banking Services

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

OFRC Working Papers Series from Oxford Financial Research Centre

Abstract: We provide evidence that firms attempting IPOs condition offer terms and the decision whether to carry through with an offering on the experience of their primary market contemporaries. Moreover, 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. Our findings are consistent with investment banks implicitly bundling offerings subject to a common valuation factor to achieve more equitable internalization of information production costs and thereby preventing coordination failures in primary equity markets.

New Economics Papers: this item is included in nep-fin
Date: 2002
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