Journal of Finance Vol. 58 No. 2 2003

Evidence of Information Spillovers in the Production of Investment Banking Services

Lawrence M. Benveniste¹; Alexander Ljungqvist^2,3; William J. Wilhelm⁴; Xiaoyun Yu^5,6

¹ University of Minnesota · ² Economic Policy Institute · ³ New York University · ⁴ Oxford Spires Academy · ⁵ The Centre for Health (New Zealand) · ⁶ Indiana University

Abstract

We provide evidence that firms attempting IPOs condition offer terms and the decision whether to carry through with an offering on the experience of their primary market contemporaries. Moreover, while initial returns and IPO volume are positively correlated in the aggregate, the correlation is negative among contemporaneous offerings subject to a common valuation factor. Our findings are consistent with investment banks implicitly bundling offerings subject to a common valuation factor to achieve more equitable internalization of information production costs and thereby preventing coordination failures in primary equity markets.

DOI

10.1111/1540-6261.00538

Volume

58

Issue

2

Pages

577-608

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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