The role of underwriter peer networks in IPOs |
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| Affiliation: | 1. Dongguk Business School, Dongguk University, 3-26 Pil-dong, Chung-gu, Seoul 100-715, Republic of Korea;2. College of Business, Ferris State University, Big Rapids, MI 49307, USA;3. 2E Calvin Hall, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA;4. College of Business Administration, Kent State University, Kent, OH 44242, USA;1. University of Georgia School of Law, 304 Rusk Hall, Athens, GA 30602, United States;2. Baylor University, Hankamer School of Business, One Bear Place, #98004, Waco, TX 76798-8004, United States;1. University of Bergamo, Department of Economics and Technology Management, via Pasubio 7b, 24044 Dalmine (BG), Italy;2. Università Cattolica del Sacro Cuore, Largo Gemelli 1, 20123 Milan, Italy |
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| Abstract: | This study examines how various aspects of underwriter peer network affect IPOs. We use different network measures to capture underwriter centrality in the global network, cohesion and diversity within network, and prior industry experience of network partners. Our results show that IPOs underwritten by book managers with more central and cohesive networks and partners with previous industry experience are associated with a higher likelihood of an offer price revision and larger price revisions. We also find book managers with more central networks and partners with previous industry experience are associated with higher short-run stock returns, while book managers that maintain more reciprocated peer relationships tend to underprice more. These results indicate that underwriters use peer networks to produce information and place securities, and network structure and characteristics have implications for the quantity and quality of information and the level of cooperative efforts shared among underwriters. |
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| Keywords: | Underwriters IPOs Network analysis |
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