The pricing of underwriting services in the Australian capital market
Description
Recent media releases have placed enormous strains on the credibility of the underwriting industry. It has been alleged that underwriters in the US and UK collude and fix underwriting fees. In contrast to recent evidence on underwriter spreads in the US (Chen, H.-C., Ritter, J.R., 2000. The seven percent solution. Journal of Finance, in press.), we find that Australian underwriting fees are not clustered at one particular percentage. Using 282 underwritten industrial IPOs from 1980 to 1996, we find that underwriters systematically price their services according to firm-specific variables such as the offer size, the subscription period of the issue, the retained ownership after the IPO, the offer price, and whether options form part of the underwriter's compensation.
Impact and interest:
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| ID Code: | 207809 | ||
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| Item Type: | Contribution to Journal (Journal Article) | ||
| Refereed: | Yes | ||
| ORCID iD: |
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| Additional Information: | Funding Information: We are grateful for comments received from Jay Ritter (the referee), Ghon Rhee (the editor), Nilanjen Sen, Howard Chan, Terry Walter, Andrew Molony, Jennifer Fear, John Poynton and participants at seminars at the University of Western Australia and University of Sydney, the 1999 PACAP/FMA Finance Conference in Singapore and the 1999 Accounting Association of Australia and New Zealand Conference in Queensland. Janice How acknowledges the financial assistance from Australian Research Council Small Grants. All remaining errors are the responsibility of the authors. | ||
| Measurements or Duration: | 27 pages | ||
| Keywords: | Australian IPOs, G12, Underwriting fee | ||
| DOI: | 10.1016/S0927-538X(00)00016-0 | ||
| ISSN: | 0927-538X | ||
| Pure ID: | 75029731 | ||
| Divisions: | Past > QUT Faculties & Divisions > QUT Business School Current > Schools > School of Economics & Finance |
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| Funding Information: | We are grateful for comments received from Jay Ritter (the referee), Ghon Rhee (the editor), Nilanjen Sen, Howard Chan, Terry Walter, Andrew Molony, Jennifer Fear, John Poynton and participants at seminars at the University of Western Australia and University of Sydney, the 1999 PACAP/FMA Finance Conference in Singapore and the 1999 Accounting Association of Australia and New Zealand Conference in Queensland. Janice How acknowledges the financial assistance from Australian Research Council Small Grants. All remaining errors are the responsibility of the authors. | ||
| Copyright Owner: | Copyright 2017 Elsevier B.V., All rights reserved. | ||
| Copyright Statement: | This work is covered by copyright. Unless the document is being made available under a Creative Commons Licence, you must assume that re-use is limited to personal use and that permission from the copyright owner must be obtained for all other uses. If the document is available under a Creative Commons License (or other specified license) then refer to the Licence for details of permitted re-use. It is a condition of access that users recognise and abide by the legal requirements associated with these rights. If you believe that this work infringes copyright please provide details by email to qut.copyright@qut.edu.au | ||
| Deposited On: | 08 Feb 2021 01:41 | ||
| Last Modified: | 26 May 2024 14:33 |
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