Business, Management and Accounting
4 years ago

Investment bankers rely on intuition, not data, for IPO pricing.

1 view
SSRN Electronic Journal
Investment Bankers and IPO Pricing: Does Prospectus Information Matter?
Catherine M. Daily, S. Trevis Certo, Dan R. Dalton

Paper Summary

Investment bankers don't rely much on IPO prospectus information when setting IPO prices. Factors like firm size, age, board prestige, profitability, and equity levels don't seem to affect IPO offer prices. Even founder-led CEO firms don't impact IPO prices. A study of 192 firms from 1996 and 1997 found no clear link between these factors and IPO offer prices. This suggests that investment bankers may not consider the information in IPO prospectuses very useful for determining IPO prices.

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