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The Distribution of Information among Institutional and Retail Investors in IPOs
Author(s) -
Keloharju Matti,
Torstila Sami
Publication year - 2002
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/1468-036x.00193
Subject(s) - initial public offering , institutional investor , business , incentive , contrast (vision) , distribution (mathematics) , monetary economics , information asymmetry , finance , economics , market economy , corporate governance , computer science , mathematical analysis , mathematics , artificial intelligence
This study examines investor performance in IPOs using a unique database comprising 85,384 investors and 29 offerings from Finland. The evidence indicates that on average institutional investors do not obtain larger initial returns than retail investors, as the incentive to acquire information is limited by allocation rules which favour small orders. This result is in contrast to findings by Aggarwal et al . (2002), who show that institutional investors perform better in a bookbuilding environment. Within each investor category, however, large orders are associated with the best performance, suggesting that information differences figure more importantly within rather than between categories.