The influence of underwriter reputation, keiretsu affiliation, and financial health on the underpricing of Japanese IPOs

The influence of underwriter reputation, keiretsu affiliation, and financial health on the underpricing of Japanese IPOs

This research examines initial public offering (IPO) underpricing in Japan between 1980 and 1998. Consistent with prior research, we find no evidence that underwriter reputation influences the level of mispricing. Keiretsu-affiliated firms are more fully priced, though healthy firms and healthy keir...

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Bibliographic Details
Published in:Pacific-Basin finance journal Vol. 9; no. 5; pp. 513 - 534
Main Authors: Beckman, Judy, Garner, Jacqueline, Marshall, Beverly, Okamura, Hideo
Format: Journal Article
Language:English
Published: Elsevier B.V 01-11-2001
Elsevier
Series:Pacific-Basin Finance Journal
Subjects:
IPO underpricing
Keiretsu
Reputation
G24
IPO underpricing
G15
Reputation
Keiretsu
Online Access:Get full text
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Summary:This research examines initial public offering (IPO) underpricing in Japan between 1980 and 1998. Consistent with prior research, we find no evidence that underwriter reputation influences the level of mispricing. Keiretsu-affiliated firms are more fully priced, though healthy firms and healthy keiretsu-affiliated firms are significantly more underpriced, than are other firms. The mispricing of healthy firms occurs prior to implementation of the discriminatory price auction system and is consistent with a high demand for these IPO firms. Reduced mispricing of keiretsu firms during the post-auction period is consistent with the notion that they have more stable earnings than other firms.
ISSN:0927-538X
1879-0585
DOI:10.1016/S0927-538X(01)00026-9