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Does the effect of revealed private information on initial public offering (IPO) first trading day return differ by IPO market heat?
Author(s) -
O'Connor Keefe Michael
Publication year - 2014
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12015
Subject(s) - initial public offering , business , agency (philosophy) , private information retrieval , monetary economics , investment (military) , public information , information asymmetry , financial system , finance , economics , epistemology , politics , political science , law , public administration , philosophy , statistics , mathematics
By IPO market regime, I decompose the effect of revealed private information on the initial return of IPO s (initial public offerings) into adjusted and unadjusted private information and find (i) investment banks partially adjust the offer price in return for revealed private information in all but the non‐hot IPO market; (ii) the economic importance of private information associated with IPO s (and hence agency costs) is procyclical; and (iii) industry information spillovers between IPO s occur only in the hot and very‐hot IPO markets.