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dc.contributor.authorLjungqvist, Alexander-
dc.date.accessioned2008-05-26T12:41:12Z-
dc.date.available2008-05-26T12:41:12Z-
dc.date.issued2002-09-20-
dc.identifier.urihttp://hdl.handle.net/2451/26470-
dc.description.abstractWe study the role of underwriter compensation in mitigating conflicts of interest between companies going public and their investment bankers. Making the bank’s compensation more sensitive to the issuer’s valuation should reduce agency conflicts and thus underpricing. Consistent with this prediction, we show that contracting on higher commissions in U.K. IPOs leads to significantly lower underpricing: a one percentage point increase in the commission rate reduces the initial return by 11 percentage points, after controlling for other influences on underpricing. Moreover, we present evidence consistent with issuers choosing commission rates optimally. Overall, our results indicate that issuers and banks contract efficiently in U.K. IPOs.en
dc.language.isoen_USen
dc.relation.ispartofseriesFIN-02-026en
dc.subjectInitial public offeringsen
dc.subjectUnderpricingen
dc.subjectIntermediationen
dc.subjectIntegrated securities housesen
dc.subjectUnderwriting contractsen
dc.titleConflicts of interest and efficient contracting in IPOsen
dc.typeWorking Paperen
Appears in Collections:Finance Working Papers

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