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Underwriter Reputation (underwriter + reputation)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

Cross-sectional determinants of post-IPO stock performance: evidence from China

ACCOUNTING & FINANCE, Issue 3 2010
Xin Chang
This paper examines the cross-sectional determinants of post-IPO long-term stock returns in China. We document that the aftermarket P/E ratio has the most robust negative association with post-IPO stock returns. The negative relation indicates that the market corrects the aftermarket overvaluation of IPO firms in the long run. Underwriter reputation has a positive effect on post-IPO stock returns, while board size has a negative impact, consistent with the views that reputable underwriters mitigate the information asymmetry in IPO pricing and over-sized boards reduce the effectiveness of corporate governance. However, we find little evidence indicating that the equity ownership structure is significantly associated with post-IPO stock returns. [source]

Underwriter reputation, earnings management and the long-run performance of initial public offerings

ACCOUNTING & FINANCE, Issue 1 2010
Shao-Chi Chang
M41; G14; G24; G32 Abstract This study contributes to the extant literature on the nature of earnings management surrounding initial public offerings (IPOs) by investigating the role of underwriter reputation. We argue that prestigious underwriters will protect their reputation by carefully monitoring and certifying financial information on IPO firms, thereby limiting any potential earnings manipulation. As a result, those IPO firms that are associated with more prestigious underwriters are likely to exhibit substantially less-aggressive earnings management. Conversely, we find the existence of a negative relationship between earnings management and the post-offer performance of an IPO firm's stocks only for those firms associated with less-prestigious underwriters. [source]

The IPO Derby: Are There Consistent Losers and Winners on This Track?

FINANCIAL MANAGEMENT, Issue 1 2008
Konan Chan
We examine the individual and joint relation of discretionary accounting accruals, underwriter reputation, and venture capital backing with the long-run performance of initial public offerings (IPOs). We find that although correlated to some extent, these variables do not manifest the same underlying phenomena in their relation to IPOs' performance. The confluence of the variables is more important than using any one of them individually to identify IPOs that exhibit abnormal long-run stock returns. The combination of their negative aspects helps identify extreme underperformers. We also identify a set of winner IPOs by combining the positive aspects of the three variables. [source]

Underwriter reputation, earnings management and the long-run performance of initial public offerings

ACCOUNTING & FINANCE, Issue 1 2010
Shao-Chi Chang
M41; G14; G24; G32 Abstract This study contributes to the extant literature on the nature of earnings management surrounding initial public offerings (IPOs) by investigating the role of underwriter reputation. We argue that prestigious underwriters will protect their reputation by carefully monitoring and certifying financial information on IPO firms, thereby limiting any potential earnings manipulation. As a result, those IPO firms that are associated with more prestigious underwriters are likely to exhibit substantially less-aggressive earnings management. Conversely, we find the existence of a negative relationship between earnings management and the post-offer performance of an IPO firm's stocks only for those firms associated with less-prestigious underwriters. [source]

RELATIONSHIPS AND UNDERWRITER SPREADS IN THE EUROBOND FLOATING RATE NOTE MARKET

THE JOURNAL OF FINANCIAL RESEARCH, Issue 2 2006
Michael G. Kollo
Abstract We examine the role of issuer-underwriter relationships in determining underwriter spreads for Eurobond floating rate notes from 1992 to 2002. Financial and nonfinancial firms with long-term relationships pay a higher underwriter spread. Financial issuers that switch underwriters receive a discounted spread that is invariant to the underwriter's reputation and quality of the issue. However, the discount is not evident for nonfinancial firms. For both financial and nonfinancial firms, spreads are higher for noninvestment grade issues and, within investment grade, increase as quality declines. We also find higher spreads when underwriting is syndicated, and a strong negative time trend consistent with increasing competitive pressures. [source]

The Effect of Underwriters' Reputationson Post-Deregulation IPO Pricing: Price Discovery Ability Versus Bargaining Power,

ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, Issue 4 2009
Kang Heum Yon
Abstract This study empirically examines the role of underwriters' reputations on the IPO pricing process and its effect on subsequent initial returns. We analyzed 275 IPOs between July, 2002 and December, 2006. The reputation of each underwriters was analyzed based on the data reflecting their performances over the preceding three years. The analysis considered the following: number of offerings, the natural logarithm of average offering size, the relative offering size, the inverse of average underpricing ratio, and the ratio of refraining from undertaking a market stabilization activity or exercising a putback option. The logarithm of the underwriter's asset size and the composite index of the above six reputation variables are included in the variable we call "reputation." We find that underwriters with higher reputation exercise more bargaining power than either issuing firms or institutional investors in the offer price decision process. On the other hand, the underwriters' certification role is not sufficiently carried out to build a reputation on price discovery. We propose an incentive system that would encourage voluntary assessment of underwriters' competency, which can ultimately bolster their reputations in terms of their price discovery ability. [source]