Ownership Concentration and IPO Underpricing: Evidence from the U.S. Stock Market

Jiang, Yanru (2012) Ownership Concentration and IPO Underpricing: Evidence from the U.S. Stock Market. [Dissertation (University of Nottingham only)] (Unpublished)

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Underpricing for Initial Public Offering (IPO) is one of the hottest field financial researchers studied. Many existing theories have tried to explain the reason for underpricing. This study proposes that IPO is not a basic step for a firm raising new capital. It is also a conflict process of interest between different shareholders among large shareholders, controlling shareholders and small or outside shareholders. Because of the initial owners’ desire of controlling the firm after IPO, the ownership structure plays an important role in deciding the issuing price and initial return for the firm.

This research is trying to investigate the impact of ownership concentration on IPO underpricing. It provides an empirical analysis on this relationship based on the data of the U.S. market during the period of 2006 to 2009. OLS is employed. Other than previous researches, this study divided the ownership concentration into two aspects, namely pre-IPO ownership concentration and post-IPO ownership concentration. Regressions are used to find out the impact of pre-IPO ownership concentration, post-IPO ownership concentration and the difference between the pre-IPO and post-IPO ownership concentration on the degree of underpricing respectively. The empirical results show that the pre-IPO ownership concentration has negative impact on IPO underpricing while the post-IPO ownership concentration have a positive impact on underpricing and these impacts are not sperate. Difference between the pre-IPO and post-IPO are negative related with the degree of underpricing. The theories of asymmetric information are employed to explain the relationships.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 08 Apr 2013 11:17
Last Modified: 19 Oct 2017 13:06
URI: https://eprints.nottingham.ac.uk/id/eprint/25695

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