Business, Management and Accounting
8 years ago

IPOs with More Co-Managers Reduce Placement Risk, Boosting Market Confidence

Financial Review
IPO Placement Risk and the Number of Co‐Managers
Wallace N. Davidson, Biao Xie, Weihong Xu

Paper Summary

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The number of co-managers in an IPO is linked to the level of risk involved in the placement. More co-managers are hired when there is higher placement risk. Factors like price uncertainty and being a high-tech IPO lead to more co-managers being hired, while IPOs in regulated industries hire fewer. Additionally, larger IPOs, recent IPOs, and those with reputable lead underwriters tend to hire more co-managers.