TY - JOUR
T1 - A simple test of Baron's model of IPO underpricing
AU - Muscarella, Chris J.
AU - Vetsuypens, Michael R.
N1 - Funding Information:
*This research was supported by grants from the Center for the Study of Fi and Markets and the Research and Development Council at the Cox Scho~ thank Harry DeAngelo fo Chris Barry, Gailen Mite, their helpful comments. University, the Universit this paper was prese
Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.
PY - 1989/9
Y1 - 1989/9
N2 - This paper tests Baron's (1982) model of initial public offering (IPO) underpricing. That model relies on information asymmetries between issuers and underwriters and predicts that offer prices will be lower than would prevail in the absence of asymmetric information. We examine the initial public offerings of 38 investment banks that went public in the period 1970-1987 and participated in the distribution of their own securities. We find that contrary to the implication of Baron's model such self-marketed offerings are characterized by statistically significant underpricing comparable to that of other IPOs.
AB - This paper tests Baron's (1982) model of initial public offering (IPO) underpricing. That model relies on information asymmetries between issuers and underwriters and predicts that offer prices will be lower than would prevail in the absence of asymmetric information. We examine the initial public offerings of 38 investment banks that went public in the period 1970-1987 and participated in the distribution of their own securities. We find that contrary to the implication of Baron's model such self-marketed offerings are characterized by statistically significant underpricing comparable to that of other IPOs.
UR - http://www.scopus.com/inward/record.url?scp=0001514171&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0001514171&partnerID=8YFLogxK
U2 - 10.1016/0304-405X(89)90074-3
DO - 10.1016/0304-405X(89)90074-3
M3 - Article
AN - SCOPUS:0001514171
SN - 0304-405X
VL - 24
SP - 125
EP - 135
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 1
ER -