Global Integration in Primary Equity Markets: The Role of U.S. Banks and U.S. Investors
- Topics:
- Equity
- Tags:
- Equity,
- Finance,
- Financial Services,
- Integration,
- Investment,
- Investor,
- IPO,
- U.S.,
- University Of Oxford
- Source:
- University of Oxford
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Overview: This paper examines the costs and benefits of the global integration of primary equity markets associated with the parallel diffusion of U.S. underwriting methods. It analyzes both direct and indirect costs (associated with under-pricing) using a unique dataset of 2,143 IPOs by non-U.S. issuers from 65 countries in 1992-1999. Book building typically costs twice as much as a fixed-price offer, but on its own, does not lead to lower under-pricing. However, when conducted by U.S. banks and/or targeted at U.S. investors, book-building can reduce under-pricing significantly, relative to fixed-price offerings or book-building efforts conducted by 'local' banks.
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Format: PDF | Size: 206KB | Date: Apr 2001 | Pages: 45
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