Currying Favor To Win IPO Mandates
- Topics:
- IPO
- Tags:
- Bank,
- Finance,
- Financial Planning,
- Financial Services,
- Investment,
- IPO
- Source:
- University of Toronto
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Overview: This paper uses a sample of U.S. IPOs (Initial Public Offering) to investigate whether a bank can win IPO mandates by issuing flattering analyst recommendations to IPOs. It was found that security analysts increase their bank's chance of co-managing an IPO when they have issued generous recommendations to IPOs managed by the IPO's lead manager. However, this result holds only for prestigious banks. Less prestigious banks, whose recommendations are less influential; do not obtain such rewards from lead managers. It was also found that security analysts increase their bank's chance of managing future IPOs when they have issued generous recommendations to IPOs managed by their own bank.
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Format: PDF | Size: 308KB | Date: Mar 2006 | Pages: 52
