Date of Award
Doctor of Philosophy (PhD)
J. Chris Leach
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.
Brown, David Clayton, "Investing in Security Price Informativeness: The Role of IPO Underpricing" (2014). Finance Graduate Theses & Dissertations. 9.