Date of Award

Spring 1-1-2014

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Finance

First Advisor

J. Chris Leach

Second Advisor

Nathalie Moyen

Third Advisor

Bkorn Jorgensen

Fourth Advisor

Mattias Nilsson

Fifth Advisor

Jaime Zender

Abstract

Firms can enhance the information content of their future stock prices by using underwriters to direct underpriced IPO allocations to information-producing investors. Sufficiently large allocations and the promise of future, profitable IPO participation provide incentives for investors to increase information production after the IPO. Increasing underpricing strengthens these incentives, resulting in a more informative post-IPO price and higher firm value. Firms' desires for more informative post-IPO pricing lead to new rationales for IPO underpricing and the intermediating role of underwriters. Using significant changes in institutions' quarterly holdings to measure post- IPO information production, empirical tests provide support for the model's novel implications.

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