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| Author: | Ljungqvist, A. P. Jenkinson, T. Wilhelm, W. J. Jr. |
| Title: | Global integration in primary equity markets: the role of U.S. banks and U.S. investors |
| Journal: | Review of Financial Studies
2003 : SPRING, VOL. 16:1, p. 63-99 |
| Index terms: | Initial public offerings Stock markets Investors Banks USA |
| Language: | eng |
| Abstract: | The authors examine the costs and benefits of the global integration of initial public offering (IPO) markets associated with the diffusion of U.S. underwriting methods in the 1990s. Bookbuilding is becoming increasingly popular outside the United States and typically costs twice as much as a fixed-price offer. However, on its own, bookbuilding only leads to lower underpricing when conducted by U.S. banks and /or targeted at U.S. investors. For most issuers, the gains associated with lower underpricing outweighted the additional costs associated with hiring U.S. banks or marketing in the United States. This suggests a quality/price trade-off. |
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