Business, Management and Accounting
7 years ago

Underwriters' loans in IPOs lead to higher fees and lower offer prices.

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Marriage or flirt? Lending between underwriters and issuers in IPOs.
Fernanda Larissa Lima

Paper Summary

Underwriters in Brazilian IPOs from 2004-2008 often gave loans to issuers. The loans were found to help firms improve their financial standing and offer better prices, rather than just building relationships. IPOs with loans from underwriters had higher fees and lower offer price revisions compared to those without loans.

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