The IPO Market Jay R RitterUniversity of Florida March ：在IPO市场杰R 3 ritteruniversity佛罗里达.pptVIP

Summary ? Hot and Cold markets will continue Long-run underperformance is restricted to companies going public with less than $50 million in annual sales In the U.S., auctions are becoming more common ? Regulatory reform has changed the game a little Spinning has been nearly eliminated Tying of loans to underwriting is controversial Analyst lust will continue Issuers still put up with underpricing Commission business in return for IPOs is still allowed Underwriters still have an incentive to underprice The academic literature still focuses too much on asymmetric information models rather than agency models ? * The IPO Market ? Jay R. Ritter University of Florida ? March 2006  Terminology: ? First-day return = 100% x (Closing price – offer price)/offer price ? First-day return a.k.a. “underpricing” ? ? Money on the table = number of shares sold x (closing price – offer price)  Table 1 Summary Statistics for 6,816 IPOs with Offer Price 3 $5.00 Average, 2001 Dollars Period Mean First - day Return Money Left on the Table Gross Proceeds 1980 - 1989 7% $2.7 million $42 million 1990 - 1998 15% $10 million $72 million 1999 - 2000 65% $82 mi llion $161 million 2001 - 2005 11% $20 million $223 million 1980 - 2005 18% $17 million $86 million Academic explanations for underpricing ? The “winner’s curse” or “Groucho Marx theorem” (Rock) If you are unsure of the fair value of shares being sold, and there is excess demand, the most optimistic investors are likely to get the shares ? Thus, conditional on getting the shares, you find out that you are probably overoptimisitic ? The need to give institutions an incentive to investigate a company and buy its shares (Benveniste and Spindt) These are