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| Author: | Spiess, D. K. Pettway, R. H. |
| Title: | The IPO and first seasoned equity sale: Issue proceeds, owner/managers' wealth, and the underpricing signal |
| Journal: | Journal of Banking and Finance
1997 : JUL, VOL. 21:7, p. 967-988 |
| Index terms: | INITIAL PUBLIC OFFERINGS PRICING SIGNALING STOCK MARKETS |
| Language: | eng |
| Abstract: | It has been suggested in a number of recent models of IPO underpricing that companies choose to underprice their inititial offerings to signal that they are high quality and thus, receive a more favorable market reaction to their subsequent seasoned equity offering. The implication is that combined net proceeds from the initial and seasoned equity sales should be higher for firms that signal with greater underpricing of their initial offerings. This article reexamines the signaling model predictions both from the perspective of the new firm and from the perspective of its managers/owners. |
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