Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/34869
Title: Investment banks' entry into new IPO markets and IPO underpricing
Authors: Fung, SYK 
Gul, FA
Radhakrishnan, S
Keywords: IPO underpricing
Market share
Investment banks
Hong Kong
Issue Date: 2014
Publisher: Institute for Operations Research and the Management Sciences
Source: Management science, 2014, v. 60, no. 5, p. 1297-1316 How to cite?
Journal: Management science 
Abstract: We examine the relationship between investment banks' initial public offering (IPO) market shares and their prior IPO underpricing in the new IPO market for China-based companies on the Hong Kong Stock Exchange. To gain expertise in Chinese business practices, investment banks have the incentive to obtain business in this new IPO market by providing high offer prices to the issuer, leading to less underpricing and less money on the table. We hypothesize and find that the less an investment bank underprices China-based company IPOs, the greater its subsequent market share of China-based company IPOs in the Hong Kong Stock Exchange. Furthermore, this relationship is driven by a bank's initial China-based company IPO deals. These results suggest that in new IPO markets, investment banks' initial market shares, obtained through lower underpricing, help them grow their market shares in later periods, possibly through the expertise gained in the initial business.
URI: http://hdl.handle.net/10397/34869
ISSN: 0025-1909
EISSN: 1526-5501
DOI: 10.1287/mnsc.2013.1817
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